Could a Kentucky city leave a joint tourism commission and impose its own hotel room tax?

Plain-English summary

The Kentucky Attorney General concluded in 2015 that a city could withdraw from a joint city-county tourism commission, create its own commission, and impose a separate transient room tax under the law the opinion reviewed. The AG grounded the withdrawal in city home-rule authority and read the tourism statutes as allowing separate city and county commissions.

The opinion recognized an important limit: a city-county agreement’s termination terms governed while the contract remained in force. It also identified a then-applicable three-percent cap for the separate city tax. The AG withdrew an older opinion about dissolving a county-only commission to the extent it implied that a commission could never be dissolved because no statute expressly provided for dissolution.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Could a city leave a joint tourism commission without a statute expressly saying “withdraw”?

The AG said yes. It found no express prohibition or comprehensive state scheme that displaced the city’s home-rule authority.

Did an interlocal agreement matter?

Yes. The opinion said any contract terms governing termination controlled while the agreement remained in force.

Could the city impose a separate room tax after leaving?

The AG said it could create its own commission and levy a separate transient room tax. It identified a three-percent limit for the city under the statute as it stood in 2015.

Background and statutory framework

A state senator asked about withdrawal and a city tourism bureau. The AG applied KRS 82.082 on home rule, KRS 91A.350(1) and (2) on separate commissions, KRS 91A.390 on room taxes, and KRS 65.250(1)(e) on interlocal agreement termination terms. It used the preemption test from Commonwealth v. Do, Inc., 674 S.W.2d 519, 521 (Ky. 1984).

Citations and references

Statutes: KRS 82.082; KRS 91A.350(1) and (2); KRS 91A.390; KRS 65.250(1)(e).

Case cited: Commonwealth v. Do, Inc., 674 S.W.2d 519, 521 (Ky. 1984).

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Pages/Opinions.aspx
• Original Word document: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG15-007.doc

Original opinion text

OAG 15-007

March 4, 2015

Subject: Whether a city can withdraw from a joint city-county tourism commission and assess a separate tax

Requested by: Chris Girdler, Kentucky State Senate 15th District

Written by: Lainie Crouch Kaiser

Syllabus: A city may withdraw its participation from an existing tourism commission in accordance with its “home rule” powers under KRS 82.082. The legislature allows for a separate tax by allowing local governments to act separately in forming tourism commissions in KRS 91A.350(1) and (2).

Statutes construed: KRS 65.210 - 65.300, KRS 82.082, KRS 91A.350 et. seq.

Opinion of the Attorney General

State Senator Chris Girdler has asked whether a city that is part of a joint city-county tourism commission may later withdraw from the commission pursuant to KRS 91A.350 and whether a city may assess a separate transient room tax to operate a city tourist bureau pursuant to KRS 91A.390 after its withdrawal. We advise that a city may withdraw from a joint tourism commission and assess a tax to fund the operation of a city tourism bureau.

It is our opinion that a city may withdraw from a joint tourism commission because KRS 91A.350 et seq. do not expressly prohibit this action nor do the statutes construct a comprehensive codification of laws regulating tourism commissions. Under KRS 82.082, a city may withdraw its participation from an existing tourism commission in accordance with its “home rule” powers. Cities are granted broad powers under the “home rule” provision, which allows a city to use its powers within its boundaries for a valid public purpose as long as these powers are not in conflict with the Kentucky constitution or statute. A conflict will be found when an action is expressly prohibited by or there is a “comprehensive scheme of legislation” on the subject in the Kentucky Revised Statutes.

KRS 91A.350 et seq. empower cities and counties to create tourism boards individually or jointly and set rules for their membership and financing. While KRS 91A.350 et seq. expressly confer the power to form tourism commissions, they do not expressly confer the power to dissolve those commissions or withdraw from joint commissions. KRS Chapter 65, The Interlocal Cooperation Act, governs the establishment of the joint tourism commission. KRS 65.250(1)(e) provides that the permissible method for a partial or complete termination of an interlocal agreement (and disposition of any joint property) must be included in the agreement. If a contract between city and county exists and it establishes rules for termination, those terms govern. However, in the absence of such terms, it would be inequitable to force two government entities to be bound together for perpetuity because no dissolution language is provided in their agreement. The absence of statutory language regarding the ability of a local government to dissolve or withdraw from commissions cannot be construed to prohibit the action. Rather, it implies such an action is within the City’s power.

In OAG 82-26, we addressed the question of “whether the county judge/executive and/or county fiscal court is authorized by statute to dissolve a county tourist commission once such a commission has been properly established.” We advised “that there are no statutory provisions for the dissolution of the commission, and that the county judge/executive with or without the fiscal court has no authority to dissolve the commission.” In OAG 82-26, the tourism commission was created solely by a county rather than a joint city-county tourism commission, so it is not directly on point. However, we disagree with the reasoning behind OAG 82-26, to the extent that it implies that a commission could never be dissolved because of the nonexistence of any statutes expressly providing for it. “We know of no limitation upon the right of the Legislature to repeal or modify at its pleasure a grant of power or authority…that does not involve interference with a vested contract right…Subject to the exception noted, there is no statute that cannot be repealed; and so there is no such thing known to our law as an irrepealable legislative act.” Commonwealth v. Ewald Iron Co., 154 S.W. 931, 934-35 (Ky. 1913). Provided that a local government involved in a tourism commission is no longer subject to any contract in force, the local government may withdraw from a joint tourism commission or dissolve a tourism commission created solely by the local government in its discretion. To the extent OAG 82-26 is inconsistent with the reasoning in this opinion, it is hereby withdrawn.

The issue is whether KRS 91A.350 et. seq. comprise a comprehensive scheme of legislation, and we are of the opinion they do not. The test for whether a comprehensive scheme of legislation exists is set forth in Commonwealth v. Do, Inc., 674 S.W.2d 519, 521 (Ky. 1984), which states that:

(1) The subject matter has been so fully and completely covered by general law as to clearly indicate that it has become exclusively a matter of state concern;

(2) the subject matter has been partially covered by general law couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action; or

(3) the subject matter has been partially covered by general law and the subject is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the municipality.

Regarding the first factor, we do not find that KRS 91A.350 et seq. fully and completely cover the subject matter of tourism commissions. KRS 91A.350 allows local governments to form tourism commissions independently or jointly, and KRS 91A.360, 370, 372, and 380 specify how the members of tourism commissions are to be chosen and removed for each form of local government. KRS 91A.390 specifies the transient room taxes that local governments may apply to fund tourism commissions, and KRS 91A.360(5), 370(10), 372(5), 380(5) and 390 prescribe auditing requirements. KRS 91A.360(4), 370(9), 372(4), and 380(4) grant the tourism commissions power to contract for the promotion of tourist and convention business. These provisions are the entirety of state regulation of tourism commissions.

Generally speaking, KRS 91A.350 et seq. only regulate the membership of tourism commissions, their sources of funding, and endow them with the power to contract. There is no comprehensive and detailed delineation of the powers or affairs of tourism commissions. In such circumstances, we do not find a comprehensive scheme that so fully and completely covers the subject matter such that the legislature’s actions preempt any local action on the same subject matter. Thus, the first part of the preemption test is not met. Similarly, regarding the second part of the test, KRS 91A.350 et seq. have not been couched in such terms as to indicate that they do not tolerate additional local action. Therefore, the second part of the test is not met.

Finally, as to the third part of the test, the possibility of multiple tourism boards does create the possibility of additional taxation on the transient citizens of the state. We cannot say that any adverse effect on the transient citizens of the state would outweigh the possible benefit to the municipality of additional revenue for tourism promotion. Further, the legislature seems to have expressly allowed for multiple tourism commissions, and thus multiple taxation, by allowing local governments to act separately in forming tourism commissions in KRS 91A.350(1) and (2). The local governing body, other than an urban-county government, will be limited to no more than a three percent tax rate by 91A.390(1)(b)(1) to fund the operation of the commission.

In conclusion, a city may use its home rule powers to withdraw from a city-county joint tourism commission. This action is neither expressly denied by KRS 91A.350 et seq. nor preempted by a comprehensive legislative scheme. Consequently, a city may establish its own tourism commission under its home rule powers and charge a separate transient room tax at a rate not to exceed three percent in keeping with the provisions of KRS Chapter 91A.

Yours very truly,

Jack Conway

Attorney General

Lainie Crouch Kaiser

Assistant Attorney General