KRS § 96.820 — KY Code / Title IX / Chapter 96 / Section 96.820
96.820 Payment of sums equivalent to taxes based on book value
Status: in_force

96.820 Payment of sums equivalent to taxes based on book value.

(1) For the purposes of this section, unless the context requires otherwise:

(a) "Taxing jurisdiction" shall mean each county, each school district, each

municipality, and each other special taxing district located within the state.

(b) "State" shall mean the Commonwealth of Kentucky.

(c) "Tax equivalent" shall mean the amount in lieu of taxes computed according

to this section which is required to be paid by each board to the state and to

each taxing jurisdiction in which the board operates and required by

subsection (11) of KRS 96.570 to be included in resale rates.

(d) "Tax year" shall mean the twelve (12) calendar-month period ending with

December 31.

(e) "Current tax rate" shall mean the actual levied ad valorem property tax rate of

the state and of each taxing jurisdiction which is applicable to all property of

the same class as a board's property subject to taxation for the tax year

involved.

(f) "Book value of property" or "book value of property owned by the board"

shall mean the sum of:

1. The original cost (less reasonable depreciation or retirement reserve) of

a board's electric plant in service on December 31 of the immediately

preceding calendar year located within the state, used and held for use in

the transmission, distribution, and generation of electric energy, and

2. The cost of the material and supplies owned by a board on December 31

of the immediately preceding calendar year. For the purpose of this

definition, "electric plant in service" shall mean those items included in

the "electric plant in service" account prescribed by the Federal Energy

Regulatory Commission uniform system of accounts for electric utilities,

and "material and supplies" shall mean those items included in the

accounts grouped under the heading "material and supplies" in the said

system of accounts.

(g) "Adjusted book value of property" or "adjusted book value of property owned

by the board" shall mean the book value of property owned by the board

excluding manufacturing machinery as interpreted by the Department of

Revenue for franchise tax determination purposes.

(h) The "adjustment factor" shall be one hundred twenty-five percent (125%) for

the tax year 1970. For each tax year thereafter, it shall be the duty of the

Department of Revenue to compute the adjustment factor for that tax year as

follows: For each five (5) percentage points or major fraction thereof by which

the adjustment ratio for electric utility property for the immediately preceding

tax year exceeded or was less than one hundred sixteen percent (116%), five

(5) percentage points shall be added to or subtracted from one hundred

twenty-five percent (125%). For the purposes of this computation,

"adjustment ratio for electric utility property" shall mean the ratio of total

assessed value to total property value for all public service corporations

distributing electric energy to more than fifty thousand (50,000) retail electric

customers within the state. "Total assessed value" shall mean the total actual

cash value assigned by the Department of Revenue for ad valorem property

tax purposes to the property of such corporations located within the state

(properly adjusted for property under construction). "Total property value"

shall mean the sum of:

1. The depreciated original cost of the total utility plant in service of such

corporations within the state, and

2. The book value of material and supplies of such corporations located

within the state, both as derived from published reports of the Federal

Energy Regulatory Commission, or in the absence thereof, from

information provided to the Department of Revenue by such

corporations.

(i) "Electric operations" shall mean all activities associated with the

establishment, development, administration, and operation of any electric

system and the supplying of electric energy and associated services to the

public, including without limitation the generation, purchase, sale, and resale

of electric energy and the purchase, use, and consumption thereof by ultimate

consumers.

(2) It shall be the duty of each board, on or before April 30, to certify to the Department

of Revenue the book value of property owned by the board and the adjusted book

value of property owned by the board and located within the state and within each

taxing jurisdiction in which the board operates. A copy of the certification shall also

be sent by the board to each such taxing jurisdiction. The book value of property

and adjusted book value of property shall be determined, and the books and records

of the board shall be kept in accordance with standard accounting practices, and the

books and records of each board shall be subject to inspection by the Department of

Revenue and by representatives of the affected taxing jurisdictions and to

adjustment by the Department of Revenue if found not to comply with the

provisions of this section. Upon the receipt of the required certification from a

board, the Department of Revenue shall make any inspection and adjustment,

hereinabove authorized, as it deems necessary, and no earlier than September 1 of

each year the Department of Revenue shall certify to the board and to the county

clerk of each county in which the board operates the book value of property owned

by the board and the adjusted book value of property owned by the board, located

within each taxing jurisdiction in which the board operates and within the state. At

the same time, the Department of Revenue shall certify to the board and to the

county clerk the adjustment factor for the tax year. The county clerk shall promptly

certify the book value of property, the adjusted book value of property, and the

adjustment factor certified by the Department of Revenue, to the respective taxing

jurisdiction in which the board operates.

(3) (a) Each board shall pay for each tax year, beginning with the tax year 1970, to

the state and to each taxing jurisdiction in which the board operates, a tax

equivalent from the revenues derived from the board's electric operations for

that tax year, computed according to this subsection.

(b) The tax equivalent for each tax year payable to the state shall be the total of:

1. The book value of the property owned by the board within the state,

multiplied by the adjustment factor, multiplied by the current tax rate of

the state, less thirty cents ($0.30), plus

2. The state's portion of the amount payable under paragraph (d) of this

subsection.

(c) The tax equivalent for each tax year payable to each taxing jurisdiction in

which the board operates shall be the total of:

1. The adjusted book value of property owned by the board within the

taxing jurisdiction, multiplied by the adjustment factor, multiplied by the

current tax rate of the taxing jurisdiction; provided, however, for the

purpose of this calculation the tax rate for school districts shall be

increased by thirty cents ($0.30), plus

2. The taxing jurisdiction's portion of the amount payable under paragraph

(d) of this subsection.

(d) For purposes of this subsection, "amount payable" shall mean four-tenths of

one percent (0.4%) of the book value of property owned by the board located

within the state. The state shall be paid the same proportion of the amount

payable as the payment to the state under subparagraph 1. of paragraph (b) of

this subsection represents of the total payments to the state and all taxing

jurisdictions in which the board operates required by subparagraph 1. of

paragraph (b) and subparagraph 1. of paragraph (c) of this subsection. Each

taxing jurisdiction in which the board operates shall be paid the same

proportion of the amount payable as the payment to the taxing jurisdiction

under subparagraph 1. of paragraph (c) of this subsection represents of the

total payments to the state and all taxing jurisdictions in which the board

operates required by subparagraph 1. of paragraph (b) and subparagraph 1. of

paragraph (c) of this subsection. Under the regulations the Department of

Revenue may prescribe, upon the board's receipt from the state and taxing

jurisdictions of notice of the amount due under subparagraph 1. of paragraph

(b) and subparagraph 1. of paragraph (c) of this subsection, the board shall

compute the portion of the amount payable which is due the state and each

taxing jurisdiction in which the board operates.

(e) Payment of the tax equivalent under this section for each tax year shall be

made by each board to the state within thirty (30) days after receipt by the

board of the certification from the Department of Revenue required by

subsection (2) of this section and shall be made directly to each taxing

jurisdiction in which the board operates within thirty (30) days from the date

of the certifications by the county clerk required by subsection (2) of this

section. The state and each taxing jurisdiction in which a board operates shall

have a superior lien upon the proceeds of the sale of electric energy by that

board for the amounts required by this section to be paid to it.

(4) Except as hereinafter provided, the tax equivalents computed under this section

shall be in lieu of all state, municipal, county, school district, special taxing district,

other taxing district, and other state and local taxes or charges on the tangible and

intangible property, the income, franchises, rights, and resources of every kind and

description of any municipal electric system operating under KRS 96.550 to 96.900

and on the electric operations of any board established pursuant thereto, and the tax

equivalent for any tax year computed and payable under this section to the state or

to any taxing jurisdiction in which any board operates shall be reduced by the

aggregate amount of any tax or charge within the meaning of this sentence which is

imposed by the state, or by any taxing jurisdiction in which a board operates, on the

board, the electric system, or the board's electric operations. Provided, however, that

if any school district in which property of a board is located has elected, or does

hereafter elect, to apply the utility gross receipts license tax for schools to all utility

services as provided by KRS 160.613 through KRS 160.617, or as may hereafter be

provided by other statutes, the amount of such utility gross receipts license tax shall

not reduce, or in any manner affect, the amount payable to any such board or boards

under the provisions of this section. It is the intent and purpose of this provision to

eliminate all sums received by any such board or boards by reason of the utility

gross receipts license tax from any computation of the amount payable under this

section to any such board or boards, irrespective of the manner in which that

payment is computed, so that, in no event, shall any sum received by any school

district by reason of the utility gross receipts license tax reduce, directly or

indirectly, the amount payable to such district under this chapter. Provided, further,

that if the state shall levy a statewide retail sales or use tax on electric power or

energy, collected by retailers of the energy from the vendees or users thereof, and

imposed at the same rate or rates as are generally applicable to the sale or use of

personal property or services, including natural or artificial gas, fuel oil, and coal as

well as electric power or energy, the retail sales or use tax shall not be deemed to be

a tax or charge within the meaning of the first sentence of this subsection, and the

tax equivalent payable for the tax year to the state under this section shall not be

reduced on account of such retail sales or use tax.

(5) (a) Notwithstanding subsection (3) of this section, until the first tax year in which

the total of:

1. The tax equivalent payable to the state, or to any taxing jurisdiction in

which the board operates, computed under subsection (3) of this section,

plus

2. The additional amounts permitted to be paid to the state or taxing

jurisdiction without deduction under the second and third sentences of

subsection (4) of this section, exceeds the minimum payment to the state

or taxing jurisdiction specified in paragraph (b) of this subsection, the

tax equivalent for each tax year payable to the state or taxing jurisdiction

shall be an amount equal to the minimum payment computed under

paragraph (b) of this subsection.

(b) For purposes of this subsection, the minimum payment to the state or to any

taxing jurisdiction in which the board operates shall mean an amount equal to

the total of:

1. The largest actual payment made by the board pursuant to this section to

the state or to the taxing jurisdiction for any of the tax years 1964, 1965,

or 1966, plus

2. The state's or taxing jurisdiction's pro rata share of an amount equal to

four-tenths of one percent (0.4%) of the increase since July 1, 1964, in

the book value of property owned by the board within the state. For the

purposes of this paragraph "pro rata share" shall mean the same

proportion of the amount computed under this subparagraph as the

largest actual payment in lieu of taxes made by the board to the state or

taxing jurisdiction for the applicable tax year under subparagraph 1. of

this paragraph represents of the total amount of the largest actual

payments in lieu of taxes made by the board to the state and to all taxing

jurisdictions in which it operated for any of the applicable tax years.

(c) The provisions of paragraph (e) of subsection (3) of this section shall apply to

all payments required under this subsection.

(d) This subsection shall not be applicable for the first tax year specified in

paragraph (a) of this subsection or for any tax year thereafter, except however,

that tax year 1977 shall not be deemed as the "first tax year" as specified in

paragraph (a) and this subsection shall continue to apply in such cases.