February 8, 1994
Hon. Teresa Ann Isaac, Vice Mayor
Lexington Fayette Urban County Council
Lexington-Fayette Government Center
200 East Main Street
Lexington, Kentucky 40507
Re: Whether Urban County May Lawfully Impose Occupational Tax in Excess of 1% Limit Set Forth in KRS 68.197.
Dear Mayor Isaac:
By note dated December 21, 1993, you asked, in substance, that this office treat the letter of Jim Spencer, of Lexington, Kentucky, which accompanied your note, as a request for an Attorney General's opinion. Mr. Spencer's letter, dated December 22, 1993, indicated, in substance and in part, that KRS 68.197 establishes a 1% limit on an occupational tax, that KRS 67A.040(1)(a) deems all urban county governments as counties for purposes of state laws, and that:
The Fayette Urban County government under the guise of being a 2d class city, is in violation of the spirit of the law if not the letter of the law by exceeding this 1% limit.
We do not agree with Mr. Spencer's view as expressed in his December 22, 1993 letter.
In our view, because KRS 67A.060 authorizes urban county governments to exercise the constitutional and statutory powers of cities of the highest class within the county, an urban county, in imposing an occupational tax, is not bound by the 1% limit set forth in KRS 68.197. An urban county may, by virtue of the specific authority provided by KRS 67A.060, impose an occupational tax pursuant to KRS 92.280(2), which does not carry the 1% limit set forth in KRS 68.197. Discussion follows.
Mr. Spencer's letter indicates that KRS 68.197 places a 1% limit on "occupation taxes in all counties over 30,000 and under 300,00 population in Kentucky."
By way of technical clarification, our review of such provision does not disclose the 300,000 population maximum stated by Mr. Spencer as being provided in KRS 68.197.
Mr. Spencer's letter further indicates that KRS 67A.040(1)(a) deems all urban county governments as counties for purposes of state laws. Presumably because of the designation of an urban county as a county (KRS 67A.040(1)(a)), Mr. Spencer believes that the Lexington Fayette Urban County Council is bound, at least in spirit, by the 1% limitation on an occupation tax imposed by a county, pursuant to KRS 68.197.
KRS 92.280(2) provides:
The legislative body of each city of the second to sixth class may impose license fees on stock used for breeding purposes, and on franchises, trades, occupations and professions and may provide for the collection of such fees.
It will be noticed that the above provision does not carry a 1% maximum. At the same time, KRS 67A.060 provides, in part, that:
(1) Urban-county governments may exercise the constitutional and statutory rights, powers, and privileges, immunities and responsibilities of counties and cities of the highest class within the county[.]
It follows that in enacting an occupational tax under the authority of a city, pursuant to KRS 92.280(2), an urban county does not "act under the guise" of being a city, as indicated by Mr. Spencer's letter, but acts instead pursuant to specific statutory authorization. KRS 67A.060(1).
For the reasons indicated, in our view the Lexington-Fayette Urban County Government is not in violation of either the spirit or letter of the law in enacting an occupational tax in excess of the 1% limit expressed in KRS 68.197.
Gerard R. Gerhard
Assistant Attorney General