Could Lexington require a voter referendum before raising its occupational tax above 2%?

Plain-English summary

In 1994, Kentucky's Attorney General concluded that Lexington-Fayette Urban County Government could not use a charter amendment to require a referendum before an occupational license tax on payroll and net profits rose above 2%. A petition sought to put that requirement in the charter, but the AG found no constitutional or statutory authorization for the vote. It also said the county clerk had no duty to put the proposed amendment on the general election ballot.

The opinion relied on a general Kentucky rule that elections and ballot questions need affirmative legal authority. The charter referred to two initiative and referendum statutes that had been repealed. The AG reasoned that voter sponsorship of the proposed amendment did not cure the absence of state-level authorization for a tax referendum.

Currency note

This opinion was issued in 1994. 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.

Historical summary

Petitioners seeking a tax limit

The petition proposed a charter clause under which a payroll and net-profits tax above 2% would need voter approval before taking effect. The AG said the charter's amendment procedure could not itself grant a power to hold a referendum that the constitution or legislature had not supplied.

Urban-county government and tax authority

The opinion considered KRS 67A.070(2)'s treatment of urban-county ordinances and general statutes, assuming it also constrained charter amendments. It found a comprehensive legislative scheme requiring statutory authorization for referendums. KRS 83A.120(1) required statutory authority for city ballot questions, while KRS 92.280 allowed Lexington's occupational tax without providing for this referendum.

County clerk and the ballot

The AG concluded that Lexington-Fayette lacked power to adopt the proposed referendum requirement and that the clerk had no duty to place the petitioned amendment on the general election ballot. Its answer concerned this specific 1994 proposal and the statutes then in effect.

Common questions

Could the 1994 charter petition require a vote on tax rates above 2%?

The AG answered no. It found no constitutional or statutory authority for the occupational tax referendum the petition proposed.

Did the existing charter's referendum language supply the needed authority?

No. The opinion said the charter referred to KRS 89.600 and 89.610, both of which had been repealed.

Did it matter that voters, rather than the urban-county council, proposed the amendment?

The AG said no. It applied the same need for state constitutional or legislative authority to a voter-proposed referendum provision.

Was the county clerk required to place the amendment on the general election ballot?

The AG said the clerk had no such duty because the proposed referendum lacked legal authorization.

Background and statutory framework

The AG cited Kentucky decisions recognizing that elections need affirmative constitutional or statutory authority. It then examined the urban-county statutes and the occupational tax statute. While KRS 92.280 permitted the tax, the office found no referendum authority there. It treated KRS 83A.120(1) and other specific ballot statutes as evidence that the legislature granted referendum power explicitly when intended.

Citations and references

• KRS 67A.070(2): conflict between urban-county ordinances and statewide statutory schemes.
• KRS 83A.120(1): statutory authority for city ballot questions.
• KRS 92.280: Lexington occupational tax authority discussed by the AG.
• Kimbley v. City of Owensboro, 176 Ky. 532, 195 S.W. 1087, 1089 (1917): affirmative election authority.
• Goodloe v. Baesler, Ky., 539 S.W.2d 298, 300 (1970): county clerk ballot duty cited in the conclusion.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG94-054.htm

Original opinion text

OAG 94-54

August 4, 1994

Subject: Urban-county government: tax referendum

Written by: Ross T. Carter

Requested by: Mary Ann Delaney

Syllabus: The charter of Lexington/Fayette Urban County Government may not be amended to provide that an occupational license tax rate greater than 2% must first be submitted to the voters for approval.

OAGs cited: OAG 80-564 (followed); OAG 78-629 (followed); OAG 78-553 (followed); OAG 76-736 (followed); OAG 72-137 (followed); OAG 76-559 (followed); OAG 76-428 (followed); OAG 76-368 (followed); OAG 75-382 (followed); OAG 75-75 (followed); OAG 74-695 (followed); OAG 74-403 (followed); OAG 74-60 (followed); OAG 73-272 (followed); OAG 73-246 (followed); OAG 72-453 (followed); OAG 72-360 (followed); OAG 70-576 (followed); OAG 68-286 (followed); OAG 67-75 (followed).

Statutes construed: KRS 67A.060; KRS 83A.120.

Opinion of the Attorney General

The following question has been presented:

May the charter of Lexington/Fayette Urban County Government be amended to provide that an occupational license tax rate greater than 2% must first be submitted to the voters for approval?

The answer is no.

Background

The charter of Lexington/Fayette Urban County Government provides for a process to amend the charter by petition and referendum. A petition has been filed which states:

We the undersigned, qualified voters of the Urban County Government of Lexington, Fayette County, Kentucky, and residing each at the place indicated opposite his/her name, do hereby petition and request that the following proposed amendment to the Charter of the Lexington-Fayette Urban County Government be submitted immediately to a vote of the people at the next regular general election. The proposed amendment would add the following paragraph to be numbered Paragraph 8.06(d) to the existing language of Section 8.06 of the Lexington-Fayette Urban County Government Charter. The proposed paragraph shall read as follows: Any tax of any kind on payroll and net profits shall not exceed the rate of two percent (2%) unless a rate greater than two percent (2%) is submitted for approval to the voters before becoming effective pursuant to Section 14.02 and 14.03 of said Charter. This amendment shall be effective July 1, 1995.

The charter of Lexington-Fayette Urban County Government (which is evidently the document called a comprehensive plan in KRS chapter 67A) provides at section 12.04 that "public questions shall be enacted in accordance with the provisions for initiative and referendum as specified in KRS 89.600 and 89.610." Both of those statutes have been repealed.

Discussion

We begin with the firmly-established principle that a question may not be placed on a regular election ballot unless there is specific authority, either in the constitution or statutes, authorizing the question. That is the law in Kentucky and the general law throughout the United States.

Two Kentucky cases unequivocally make this point:

[T]he general rule is that elections cannot be held without affirmative constitutional or statutory authority.

Kimbley v. City of Owensboro, 176 Ky. 532, 195 S.W. 1087, 1089 (1917).

The general rule is that elections cannot be held without affirmative constitutional or statutory authority.

�Bryan v. City of Owensboro, 113 Ky. 680, 68 S.W. 858, 861 (1902).

Other authorities state this proposition with equal clarity:

It is fundamental that a valid election cannot be called and held except by authority of the law. There is no inherent right in the people, whether of the state or of some particular subdivision thereof, to hold an election for any purpose. Accordingly, an election held without affirmative constitutional or statutory authority, or contrary to a material provision of the law, is a nullity, notwithstanding the fact that such election was fairly and honestly conducted.

26 AmJur2d, Elections 183.

The right or power to hold an election must be based on authority conferred by law, and an election held without affirmative constitutional or statutory authority, or contrary to a material provision of the law, is universally recognized as being a nullity, even though it is fairly and honestly conducted. An election purporting to have been held under a statute which by its terms had not then gone into effect is void, as is also an election called under a void statute. A court lacks jurisdiction to authorize or compel the holding of a void election.

29 CJS, Elections 66. The United States Supreme Court has recognized that the American system of elections does not derive from the common law and therefore exists only by constitutional or statutory authority:

Our system of elections was unknown to the common law, and the whole subject is regulated by constitutions and statutes passed thereunder.

Taylor v. Beckham, 178 U.S. 548, 44 L.Ed. 1187, 20 S.Ct. 890, 1009 (1900).

The expedient of avoiding difficult questions by placing them on the ballot has occurred to county and city legislative bodies frequently over the years. The Attorney General has stated on numerous occasions that various attempts to place such questions on the election ballot were not authorized by law. Questions that were proposed for the ballot include a payroll tax, OAG 80-564; location of a coal conversion plant, OAG 78-629; zoning, OAG 78-553, 76-736, and 72-137; a highway construction project, 76-559; a proposal to restrict parking on Main Street, 76-428; funding an anti-crime program, OAG 76-368; selection of utility commissioners, OAG 75-382; collective bargaining for teachers, OAG 75-75; recreation tax, OAG 74-695; Sunday closing, 74-403; school consolidation, OAG 74-60 and 73-272; ambulance service, OAG 73-246; construction of a lake, OAG 72-453; strip mining regulation, OAG 72-360; change in tax rate, OAG 70-576; purchase of a water company, OAG 68-286; and whether to fluoridate water, OAG 67-75.

These authorities establish beyond doubt that a unit of local government may not place a question on a ballot unless the constitution or a statute grants specific authority to place the question before the voters. We find no such authority in the statutes or constitution. The authorities on which the charter relies, KRS 89.600 and 89.610, have been repealed. Although the question addressed here is somewhat unique in that it is the voters, rather than the legislative body, who propose to grant authority to conduct a referendum, our conclusion is the same. Only the General Assembly or the state constitution may grant authority to conduct a tax referendum.

We have examined the statutes dealing with urban-county government and find no legislative intent to grant urban-counties authority to hold referendums. KRS 67A.070(2) states:

Urban-county government ordinances shall be deemed to conflict with general statutes of this state only:

(a) When the ordinance authorizes that which is expressly prohibited by a general statute; or

(b) When there is a comprehensive scheme of legislation on the same subject embodied in a general statute.

Assuming that this statute operates as a constraint on charter amendments as well as ordinances, we find that the statutes provide a "comprehensive scheme of legislation" prohibiting referendums without legislative approval. In a statute dealing with city referendums, we find that a question may not be submitted to voters unless it is "authorized by statute." KRS 83A.120(1). In numerous other areas, such as annexation and ad valorem taxation, we find specific statutory procedures governing the placement of public questions on the ballot. Conversely, the statute that authorizes Lexington to impose the occupational tax, KRS 92.280, contains no language authorizing a referendum. The comprehensive scheme of legislation in this state plainly indicates that there shall be no referendums without specific legislative authorization.

Conclusion

Lexington-Fayette Urban County Government has no authority to amend its charter to provide for a referendum on occupational license taxes. The county clerk has no duty to place the proposed amendment on the general election ballot. Goodloe v. Baesler, Ky., 539 S.W.2d 298, 300 (1970).

Chris Gorman

Attorney General

Ross T. Carter

Assistant Attorney General