Sen. Robert Stivers, at left, (R-Manchester) defends Senate Bill 200 and says if Corbin goes ahead with collecting occupational tax revenue it would cripple the Knox County Fiscal Court’s ability to provide essential government services.
A bill introduced into the Kentucky Senate last week would, if passed, totally change the ground rules in the four-year-long fight between the city of Corbin and the Knox County Fiscal Court over collection of occupational tax revenues.
Kentucky State Senator Robert Stivers (R-Manchester) – whose seven-county district includes Knox County – introduced Senate Bill 200 last week as a way to fend off a successful court challenge by the city of Corbin to keep all occupational taxes generated within the city limits. Currently, the Knox County Fiscal Court gets the money.
After over a year of consideration, the Kentucky Supreme Court refused to hear an appeal filed by Knox County over the issue, paving the way for Corbin to begin keeping all of the one percent tax on employee gross wages and business net profits.
All that stands in the way of Corbin beginning collection of the tax is a hearing over county population likely to go Corbin’s way.
"If Corbin decides to move forward with the collection [of the occupational tax] it would seriously impair the ability of Knox County to provide services it is required to provide," Stivers said Tuesday.
Corbin city leaders have, in the past, estimated annual revenue from the tax to be about $600,000 to $800,000. Privately, they say it could be a $1 million or more annually. The city of Corbin asked, on prior occasions, for a breakdown of how much tax is collected from the city. Knox officials said the information doesn’t exist. Corbin leaders sought an opinion from Kentucky’s Attorney General on the issue in an attempt to force the county to produce the breakdown, but was rebuffed.
The bill was scheduled to be heard in the Senates standing Appropriations and Revenue Committee Tuesday. According to J.D. Chaney, Chief Lobbyist for the Kentucky League of Cities, it was not considered by the committee.
In Kentucky, it is forbidden to pass legislation that singles out communities or areas to the exclusion of all others – often called "special legislation." Chaney said that while the bill doesn’t specifically mention Corbin as its target, the city is the only one in the state he can think of that it would affect.
"I believe it only affects Corbin the way it is crafted," Chaney said. "It doesn’t single out anyone … any of the cities that meet its qualifications would be impacted, so it probably doesn’t constitute special legislation. Hypothetically, other cities could meet the qualifications."
"But, when you apply those qualifications it seems to only affect a single area."
Chaney said he is unsure whether he will lobby against the bill and said the matter has to be submitted to the Kentucky League of Cities Board of Directors for consideration.
The KLC represents the interest of over 400 cities in Kentucky.
The text of the bill addresses how population is determined in counties where both the city and county pass occupational tax levies.
Central to arguments in the lawsuit has been a similar dispute between the city of Barbourville and Knox County, which went all the way to the Kentucky Supreme Court, and was finally settled in 2003. Barbourville passed an occupational tax in Oct. 1999, a couple weeks before the Knox County Fiscal Court took the same measure. At the time, state law provided that counties with a population less that 30,000 did not have to allow cities with a similar tax to claim credits against the county tax. But the law did not give any mechanism by which population was to be determined.
Through expert testimony, it was ruled Knox County’s population exceeded 30,000 at the time the tax was passed. After lengthy negotiation, the two sides reached an agreement that remains in effect to this day. Barbourville gets 32 percent of all taxes collected in Knox County up to $1.8 million, and 25 percent thereafter until 2012, when it reverts to a straight 25 percent.
The bill changes how those population figures are determined, saying that the last decennial U.S. Census preceding the date of enactment of the tax by the county would be the determining factor. It would affect any population determinations made before or after July 15, 2002. The legislation would be retroactive. In the 1990 Census, Knox County’s population was less the 30,000, meaning it could continue to collect occupational tax revenues from Corbin uninhibited.
Corbin originally filed a lawsuit asking for a ruling on the issue in 2008. In that time, Corbin Mayor Willard McBurney said the city has spent about $165,000 on legal fees to fight the case.
"If you ask me, this is highway robbery," McBurney said Tuesday. "We’ve gone all this time and the courts have ruled in our favor, and now at the last minute, they’ve got a Senator that is just going to change the law for them. I think this is sleazy. It is sleazy politics."
McBurney said Stivers never consulted with any city leaders in advance of filing the bill. About 23 percent of Corbin’s citizens live in Knox County, part of Stivers’ legislative district.
Corbin City Commissioner Joe "Butch" White expressed similar outrage at Tuesday’s developments. He is the only remaining plaintiff in the lawsuit. He owns a business and resides in the Knox County portion of Corbin.
"This is dirty politics, plain and simple," White said. "They are trying to do things the sneaky way and it isn’t right."
Knox County Judge-Executive J.M. Hall would not comment on the issue Tuesday. In the past, Knox County leaders have argued that if Corbin got to retain all tax revenues from the city it would, essentially, gut the county’s budget.
Calls seeking comment from Senate President David Williams, whose district includes the Whitley County side of Corbin, were not returned.