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April 1, 2014

Stivers files amendments on Corbin-Knox Co. suit

FRANKFORT —  Senate President Robert Stivers, R-Manchester, has again filed amendments to unrelated bills that would impede legal action by the city of Corbin to retain a portion of an occupational tax levied by Knox County.

It’s not the first time Stivers has filed such an amendment to an unrelated bill – he attached a similar amendment to the 2012 budget bill, which effectively stopped a suit by Corbin against Knox County.

Stivers says the amendment does not contradict statements he’s made that it’s inappropriate for the General Assembly to legislate on issues that are in litigation. Instead, he contends, it gives local governments and officials an opportunity to work out an agreement among themselves.

That’s not quite how Nick Birkenhauer, Corbin’s attorney in the case, sees it.

He says Stivers’ amendments – both the one in 2012 and two on bills still pending but not yet passed in the 2014 General Assembly – effectively cut off Corbin’s legal options to force Knox County to let Corbin retain some of the taxes collected inside the Corbin city limits.

The issue concerns a Kentucky law which allows cities in counties of 30,000 or more population to offset or retain a portion of taxes collected inside its boundaries by the county. Corbin is unusual in that its corporate limits cross the county line between Knox and Whitley counties.

Corbin has an agreement with Whitley County to retain 75 percent of its occupational taxes collected in the city. But Knox County won’t agree to a similar agreement with Corbin, and 23 percent of Corbin’s population is in Knox County.

In 2008, Corbin filed suit in Knox Circuit Court and won a favorable decision from a special judge. But Knox County appealed and the Court of Appeals sent the case back to Knox Circuit Court to determine the county’s population at the time the county implemented its occupational tax. The Supreme Court declined to hear an appeal.

“We were walking into the (Knox County) courthouse to secure Corbin’s portion of the taxes when Stivers filed his (2012) amendment,” Birkenhauer said.

That amendment required any offset or credit of city license fees against county license fees that existed as of March 15, 2012 to remain in effect until the two-year budget period ends on June 30, 2014. On Monday, Stivers filed similar amendments to two House bills on which the Senate hasn’t yet voted – but could act on when lawmakers come back for two days on April 14 and 15.

This time, the amendments would extend the freeze through July 15, 2016.

Stivers said Tuesday the issue is no longer restricted to Corbin and Knox County, that similar disagreements have arisen in Clark, Pulaski and Shelby counties. Like Birkenhauer, Stivers said the original statute (KRS 68.197) is confusing. He says it also creates unfair situations for those affected.

Corbin, he said, collects revenue from alcohol licenses which helps fund increases for their police department but provides nothing for the county which also sees an increase in alcohol-related police duties.

“It’s unfair to the cities, it’s unfair to the counties, and most of all it’s unfair to the individuals who live there,” Stivers said, describing the statute.

He said his amendments “put everyone on notice for two weeks that they ought to get together and work out a compromise. That would be my ultimate hope.”

But that hasn’t happened thus far in the dispute which goes back for more than six years.

Stivers also denies his amendments contradict his oft-stated position that the General Assembly shouldn’t legislate on matters before the courts. During the 2014 session, Stivers has invoked that Senate policy for failing to act on House bills dealing with eminent domain and library funding. He says the matter was resolved by the Court of Appeals.

Birkenhauer says that’s incorrect. The Court of Appeals sent the case back to Knox Circuit, he said, and Stivers’ 2012 amendment stopped that proceeding. On behalf of Corbin, Birkenhauer then filed suit arguing Stivers’ 2012 amendment is unconstitutional because it wasn’t germane to the bill he attached it to and because it is “special legislation,” legislation which isn’t general but applies to one specific entity and dispute.

Birkenhauer said if Corbin wins the second case, it would invalidate Stivers’ 2012 amendment which would then allow the original case in Knox Circuit Court to proceed.

The underlying law is still very much the subject of litigation, Birkenhauer said.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at Follow CNHI News Service stories on Twitter at cnhifrankfort.

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