OAG 92-113

July 2, 1992

William F. Ivers, Jr.

Henry County Attorney

P.O. Box 128

New Castle, Kentucky 40050

Dear Mr. Ivers:

You have asked whether funds derived from a soil conservation tax imposed under KRS 262.200 are included in the computation of the 4% increase in revenue permitted under KRS 68.245.

KRS 262.200(4) says in part:

Funds for an approved budget [for a soil and water conservation district] shall be supplied either from general funds or from the levy of a millage tax on all real property within the boundaries of the county, the total amount not to exceed twenty-five thousand dollars ($25,000) in any one (1) fiscal year. The tax shall be collected in the same manner as other county taxes, and shall be credited to the board.

KRS 68.245(6)(a) says:

That portion of a tax rate, excluding any special tax rate which may be levied at the request of a county community improvement district pursuant to KRS 107.350 and 107.360, following a favorable vote upon a tax by the voters of that county, levied by an action of a county fiscal court which will produce revenue from real property, exclusive of revenue from new property, more than four percent (4%) over the amount of revenue produced by the compensating tax rate defined in KRS 132.010 shall be subject to a recall vote or reconsideration by the taxing district, as provided for in KRS 132.017, and shall be advertised as provided for in paragraph (b) of this subsection.

In OAG 80-260 we examined the question you present and concluded at page three, “Since the [soil conservation] tax is not a voted levy, and since the tax is characterized by the statute [KRS 262.200(4)] as a `county tax', the restrictions of KRS 68.245 apply.” We did not present any further analysis that would lead to that conclusion.

In OAG 67-346 we considered the same question as it related to a soil and water conservation tax that was imposed as a flat rate on acreage rather as a percentage of valuation. In concluding that the acreage tax was not subject to KRS 68.245 we said at page two, “Moreover, when reviewed as a whole, the entire purpose of [KRS 68.245] was to provide a limitation on ad valorem taxation because of the 100% assessment requirement directed by the Court of Appeals.”

We now conclude that the tax authorized by KRS 262.200 is not subject to the rate rollback provisions of KRS 68.245. To the extent that it provides to the contrary, OAG 80-260 is overruled. We reach this conclusion after observing that the intent and effect of KRS 68.245 is to provide a limitation on the amount of revenue that may be raised each year through an ad valorem property tax. The limitation on the amount of revenue that may be raised necessarily requires the rollback of property tax rates as assessed values increase.

We find exactly the same intent and effect in the $25,000 limit contained in KRS 262.200. Instead of establishing a revenue ceiling based on revenue produced in preceding years as is done in KRS 68.245, KRS 262.200 provides an absolute dollar amount as the ceiling. Each year, as assessed values increase, the tax rate under KRS 262.200 must be rolled back to insure that the $25,000 cap will not be exceeded. Since the KRS 262.200 tax already contains its own rollback provision, there is no need to subject it to the additional rollback mechanism in KRS 68.245. To do so would render the expressed $25,000 ceiling in KRS 262.200 meaningless.

Since the soil and water conservation tax is not subject to KRS 68.245, it necessarily follows that the revenue it produces should not be included in the calculations of permissible rates for other taxes that are subject to KRS 68.245.


Chris Gorman

Attorney General

Ross T. Carter

Assistant Attorney General