A ruling by a circuit court judge in northern Kentucky could lead to a dramatic slashing of the tax rates for at least 96 public library districts in Kentucky, including the Boyd County Public Library District. If so, it could result in a dramatic reduction in library services throughout the state.
Campbell Circuit Judge Julie Reinhardt Ward ordered the tax rate of the public library district in the urban county across the Ohio River from Cincinnati reduced by more than half to 1978 levels after determining the library district improperly raised its tax rate during the past 35 years by not gathering a petition as required by commonwealth law. If the ruling stands, the library tax rate in Campbell County would drop from the current 7.7 cents per $100 of assessed property value to 3 cents per $100 assessed.
Library officials contend a bill passed by the Kentucky General Assembly in 1979 makes library districts a taxing district. After the passage of the bill, library districts began passing property tax rates based on the same rules governing counties, cities and other taxing entities. Library district lawyer Jeff Mando said libraries have been acting in good faith on legal advice from the state department of Libraries and Archives that the 1979 law applied to them.
The 1979 law was used to replace the old Ashland Public Library with a countywide library district. The then-new law allowed for the creation of a new library district without a vote if 51 percent of qualified voters in the last general election signed petitions to create the district. The Boyd County Library District was created by such a petition, but its creation did not come without a legal battle. In fact, when a suit challenging the new district was pending, taxes to support the district were put on hold for a year.
The court eventually ruled in favor of the library, and the Boyd County Library District has been collecting taxes to support library services for more than 30 years. However, Reinhardt’s ruling raises questions about whether Boyd and other public library districts have been following the letter of the law in setting its tax rates.
When Boyd County residents successfully petitioned for the creation of the new library district in 1980, the district’s tax rate was set at 4 cents per $100 of property valuation. Today, the Boyd County library tax is 13.6 cents per $100 valuation. However, the Boyd County Public Library Board has lowered the tax rates for each of the last two years, and it plans to lower the rate even more for the fiscal year beginning July 1, said Boyd County Library Director Debbie Cosper.
However, if Ward’s decision is upheld on appeal, it is conceivable the tax for the Boyd County Library District could drop to 4 cents per $100. That would force a dramatic reduction in library services.
At issue is what the intentions of members of the Kentucky General Assembly were in approving the 1979 law. For the past 34 years, the assumption has been that by voters successfully petitioning for the creation of a library district, legislators were giving those districts the same powers as other governing bodies in Kentucky including fiscal courts, city councils and commissions and school boards. Since its creation, the Boyd County Public Library Board, which is appointed by the county judge-executive with the approval of the fiscal court, has steadily increased its tax rate by taking advantage of state law that allows taxing districts to increase rates to generate up to 4 percent more revenue from existing property plus what is generated from taxes on new developments. If the amount of revenue generated from old property exceeds 4 percent, residents can petition for a referendum for the higher tax rate. Taxing districts have refrained from higher tax increases to avoid a vote by the people.
In essence, Ward concluded the bill passed in 1979 does not nullify a previous statute. Because of that, the judge determined the only way library districts can increase their tax rates is through the submission of petitions bearing the signatures of at least 51 percent of the voters in the last general election. No library district has done that in more than 30 years, and by not doing so, Ward says they have improperly increased taxes.
The lawsuit challenging library taxes was filed after the Campbell County Public Library Board proposed raising its property tax 27 percent to fund a new branch in the southern end of the county. Voters rejected the tax levy, but the controversy brought to light the fact the original statute that allowed for library districts to form required the library get signatures from 51 percent of qualified voters in the last general election to raise the tax rate.
While library officials across the state contend petitions were required only for the creation of library districts, not to increase taxes, Ward disagreed. She has yet to rule on other parts of the lawsuit, including whether taxpayers should get a refund dating back more than 30 years.
Following Tuesday’s ruling, Erik Hermes, one of the lead plaintiffs in the class-action suit, joyfully proclaimed, “The people of Campbell County won. The ruling now puts the decisions of tax increases regarding the library in the hands of the taxpayer.”
Brandon Voelker, attorney for the plaintiffs, said Ward’s ruling basically means library districts throughout the state have been illegally rasing taxes for more than three decades. However, Ward’s ruling is far from being the final word on the issue. The decision is certain to be appealed all the way to the Kentucky Supreme Court, and it likely will be several years before a final ruling is made. Until then, Ward’s ruling only impacts Campbell County, although a similar suit is pending in neighboring Kenton County,
Until Tuesday, we thought the power of library districts to increase taxes was settled law in Kentucky. Now we are not so sure. One thing is certain: Regardless of the outcome of this legal challenge, we certainly don’t want to return a public library that was as limited in services as the Ashland Public Library was in the days before the creation of the county library district.