FRANKFORT — Senate President Robert Stivers, R-Manchester, two weeks ago said the Senate has a tradition of refraining from acting on legislation on matters that are then in litigation.
But on the final day of the 2012 General Assembly, Stivers filed an amendment to a budget bill which ended the city of Corbin’s suit seeking to force Knox County to allow it to keep a portion of the county’s occupational license tax while the matter was still before Knox Circuit Court.
Stivers made the statement about the Senate’s reluctance to interfere in matters before the courts after Sen. Johnny Ray Turner, D-Prestonsburg, filed a bill to legalize instant racing.
Instant racing allows bettors to wager on thoroughbred races which have already occurred without the bettor’s knowledge of which horse ran. A suit challenging the constitutionality of instant racing is currently before the Kentucky Supreme Court.
When Stivers was asked about Turner’s bill on Feb. 15, Stivers said: “We have been pretty consistent (in the Senate) in my 16 or 17 years that, while things are in litigation, the legislature shouldn’t involve themselves.”
Asked how he reconciled that statement with his 2012 amendment, which ended Corbin’s court action against Knox County, Stivers replied, “It wasn’t in court. It had been decided. The appellate process was over. It had gone through the appellate courts and to my understanding nothing was pending on it at any level.”
But the court record and the attorney representing Corbin contradict Stivers.
“The matter was absolutely still before the court when Stivers filed his floor amendment,” said Nicholas Birkenhauer of Dressman Benziger Lavelle, the Crestview Hills firm representing the city of Corbin.
“It was not over at all when (Stivers) put that amendment on the other bill,” said Corbin Mayor Willard McBurney. “It’s still in litigation.”
In 2008, Corbin filed suit against Knox County seeking to offset the county’s occupational tax levied upon the portion of Corbin residents who live in Knox County. (Corbin’s corporate limits sit across the Knox County-Whitley County line with about 23 percent of the city’s residents residing in Knox County, according to McBurney.)
Kentucky law allows counties with populations of 30,000 or more to levy such taxes and allows cities inside those counties to keep a portion of the tax. In Corbin’s case, it has an agreement with Whitley County to retain 75 percent of the Whitley County tax.
Knox County had an agreement with Barbourville to allow it to keep 32 percent of the county tax with that amount dropping to 25 percent last year.
McBurney says that agreement, combined with the county’s refusal to allow Corbin to keep a portion of the tax levied on its residents, means Corbin taxpayers contribute to Barbourville’s city budget while their taxes are denied to Corbin.
That’s why Corbin went to court in 2008, along with Corbin business owner Joe White. A special judge ruled in the city’s and White’s favor, but the county appealed.
In October 2012, the Court of Appeals sent the case back to Knox Circuit for the court to determine the county’s population at the time Knox County implemented the occupational tax and to determine when the city of Corbin could begin collecting its portion.
The order read in part, “We are required to remand this matter to the circuit court for a factual determination of Knox County’s population as of the date it passed its occupational license fee ordinance.”
Again, Knox County appealed, this time to the Kentucky Supreme Court. But in February of 2012, the Supreme Court denied the county’s application for review. That left the Court of Appeals ruling intact.
At that point, Birkenhauer said, Knox Circuit Court scheduled an evidentiary hearing to determine if Knox County’s population was 30,000 or more when it implemented the tax.
But the hearing never occurred – because on the final day of the 2012 General Assembly, Stivers succeeded in attaching an amendment to House Bill 499, a bill creating a Tax Amnesty Program.
Stivers amendment required any set-off or credit of city license fees against county license fees that existed between a city and county as of March 15, 2012, to remain in effect as it was on March 15, 2012. It effectively locked in the Knox County occupational tax and prevented Corbin’s ability to collect a portion of it or to levy its own tax.
“He threw 1,500 workers from the Knox County side of Corbin under the bus,” McBurney said.
When confronted with the order remanding the case to Knox Circuit Court, Stivers said he had been unaware the issue remained before the court when he filed the 2012 budget bill amendment.
“It was my understanding that that matter was resolved and Corbin was getting ready to institute the occupational tax,” Stivers said. He said that would have cost Knox County about $700,000.
“I was not aware that it had been remanded,” Stivers said. “I had been informed, I think, that the Supreme Court had denied their petition.”
But it was Knox County’s petition seeking to overturn the Court of Appeals ruling – not Corbin’s.
In June of last year the Corbin City Commission voted to file suit challenging Stivers’ amendment.