LOUISVILLE, Ky. (WDRB) – Whether the Jefferson County Board of Education legally passed its proposed 7-cent property tax rate increase was the focus of a two-hour hearing Friday in a case challenging the certification of a recall petition that, for now, will put the matter before voters Nov. 3.
Jefferson Circuit Judge Brian Edwards heard no testimony on the initial claim raised by the school board and the Jefferson County Teachers Association that questioned the validity of many signatures on the electronic petition, enough to potentially nullify its certification by Jefferson County Clerk Bobbie Holsclaw’s office.
Instead, Friday’s hearing centered on a counterclaim from the petition committee that questioned whether the board followed the appropriate schedule in passing its new property tax rate of 80.6 cents per $100 of assessed property value.
Attorney Tim Eifler, who represents the petition committee, said the school board approved the new tax rate months before the Kentucky Department of Revenue certified this year’s Jefferson County property tax roll. It was the first time since 2011 that the board approved a new tax rate before local tax assessments were certified, he said.
JCPS officials received notice that the district’s property tax assessment was certified Aug. 25, 15 days after Holsclaw’s office finished its review of the recall petition and verified 38,507 signatures of the 40,320 submitted. The board voted 5-2 to pass the new property tax rate on May 21.
"The board of education’s tax rates were determined more than three months prior to the certification of the assessment," Eifler said. "... Under the case law we talked about, that means those tax rates are unlawful."
"If the law prohibits a thing to be done, it’s unlawful to do," he said. "And that’s exactly what we have here."
Eifler said he wanted to see the district levy what’s known as a compensating property tax rate, which would allow JCPS to collect the same amount of revenue from property taxed in the previous fiscal year. He estimated that JCPS could collect $6 million more from taxes on new property.
The district expects the 7-cent rate increase will generate $51.5 million more in property tax receipts, a 9.5% increase.
Attorney Tyson Gorman, representing the school board, said the board could enact a rate that generates 4% revenue growth even if the 7-cent increase is defeated at the polls. The school board has indicated it will do that.
Gorman also called Chay Ritter, director of the Kentucky Department of Education’s Division of District Support, to testify. Ritter said he had discussed taxing options with the district’s Revenue Task Force months before the board’s vote on a new tax rate.
Ritter said he had "a few issues and questions" with the suggestion that school boards wait later in the year to pass recallable taxes.
"There’s a lot of moving pieces and parts to this process to get those tax bills out and obviously get these things collected," he said. "... Any delayed tax collections can create cash flow issues for a school district."
School boards cannot begin the process of fixing tax rates too soon, Ritter said in response to questioning from Gorman.
The attorney also doubted the applicability of laws cited by Eifler since they apply to county tax assessments and not specifically school districts.
Under a 1982 Kentucky attorney general opinion, Eifler said school districts could either hold a common school election for a vote on recallable tax increases or waive the petition and put the matter directly to voters during the general election.
While Eifler said a common school election would cost about $35,000, Gorman said he believed the price tag would top $1 million.
"Obviously somebody’s right or wrong about that," Gorman said.
Edwards indicated a ruling wouldn’t come soon. The circuit judge said he would issue an order next week "so we all know how we’re going to be proceeding at the next scheduled hearing."
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