Court Opinion

ID: 5029977
Source: CourtListenerOpinion
Date Created: 2021-10-01 05:20:27.831135+00
Date Added: 2024-06-11T08:18:07.195943
License: Public Domain

STEWART, Judge
(dissenting).
I dissent from the opinion for reasons that will be given.
Upon the basis of a finding by ordinance that the area involved (which comprises, for the most part, a section of Lexington’s downtown business district) is a “blighted, deteriorated and deteriorating area,” the city has assumed the right to seek to induce its own independent instrumentality (the urban renewal and community development agency of the city of Lexington) and an organ of the federal government (HHFA) to establish what the city chooses to call a “governmental project” in the area described in the opinion. To accomplish this end, it seeks to come under the terms and conditions of KRS 82.105 through 82.180, which the Statute Reviser has compiled in the Kentucky Revised Statutes under the heading, “Inducing Location of Governmental Projects.” (Emphasis added.)
Admittedly, the so-called “governmental project” is the removal of the railroad tracks from downtown Lexington. There is no indication in the record that any other urban development will be undertaken under the plan other than restoration work after the tracks are removed. The opinion stands for the proposition that this objective of the ordinance may constitute an urban renewal development venture and that it may be financed by the issuance of bonds.
A primary question is whether the removal of railroad tracks and such rehabilitation as may be a necessary result thereof is a governmental project within the meaning of KRS 82.105 through 82.180.
KRS 82.105(4) refers to a governmental project proposed by a “governmental agency”; and a governmental agency is defined by KRS 82.105(3) as the Commonwealth, the United States, or any division, department or instrumentality of either of them.
I believe the legislation under discussion envisioned the location within a city of a governmental agency which employs persons, similar to a new industry that is induced to come into the city, rather than a project involving the reconditioning contemplated here. This idea is made abun*599dantly clear in Grimm v. Moloney, cited in the opinion, wherein this statement appears:
“It may be said that the basis of the allocation of the portion of occupational tax revenue collected from employees of the Center is that it is ‘new money,’ for it would not be received but for the location of the enterprise and its expected payroll of $6,000,000. Doubtless, some of these employees would be subject to the occupational tax anyhow by reason of other jobs in the city. But it is suggested that other persons would take their places in case they transferred to the Center.”
The city is undertaking to induce its own urban renewal and community development agency and HHFA, an instrumentality of the federal government, to spend some money to remove railroad tracks, but not to “locate” a governmental project within its boundaries. In my view this is not a governmental project within the purview of KRS 82.105 through 82.180.
In the instant case the occupational taxes pledged are from existing businesses rather than from new businesses. To this extent the present case goes beyond this Court’s ruling in Grimm v. Moloney, supra; for, in that case the money pledged was considered new money that would originate from the creation of a new project “located” in Covington by a federal agency.
The action of the city is in fact a pledge of its revenue to support a bond issue without allowing the city to vote on the proposition. This practice was denounced in the case of Curlin v. Wetherby, Ky., 275 S.W.2d 934, 937. That case said on this point:
“We are of the opinion that to extend the special fund theory to include funds derived from taxes would result in sanctioning an evasion of the spirit and purpose of the constitutional prohibition against debt. In the final analysis, the practical result of a * * debt is that future government officials are prevented from expending, for what they consider the best purposes, the revenues received during their administration. The fact that the people have expressed, through the Constitution, their desire that certain revenues be expended only for a specified purpose, does not mean that the people intended their periodically elected representatives to have any authority other than to expend current revenues for that purpose.”
The opinion makes no distinction between occupational taxes collected from employment or business in the area before the tracks are removed and those derived from the same area thereafter. All such taxes, regardless, so the opinion holds, may be pledged for the payment of the city’s share of the expense incurred. This holding flies in the face of the plain unambiguous language of KRS 82.145(2) (b).
Reduced to its simplest terms this statutory subsection provides that the governmental project must be of such a nature as to provide increased revenue to the city by reason of increased employment from occupational taxes. Only when this condition exists may the city pledge and segregate the receipts “which may be definitely identified as accruing from such occupational license fees or taxes by reason of employment in or directly related to the governmental project.”
Thus the clear import of KRS 82.145(2) (b) is that it applies solely to a governmental project that creates increased employment which provides increased revenues to a city. Does the removal of railroad tracks achieve this result? Certainly not. Furthermore, we conceive it to be impossible to definitely identify occupational tax receipts arising in the proposed urban renewal area “as accruing * * * by reason of employment in or directly related to the government project * sjc * if
*600The opinion states that the “ordinance does not bind the city to continue for any period of time the imposition of occupational license fees.” The implication of this statement is that a prolonged debt is not incurred, even though an unconditional long-term pledge of a portion of the occupational taxes is made under the ordinance to meet the city’s share of the cost that will be incurred. A city may noti abandon -its duty to collect occupational taxes in the area where it is now collecting such revenue for general city use in order to escape the obligation it seeks to assume in the case at bar. The method suggested by the opinion as a means of escaping liability, at some future time, for the expense of removing the tracks has been condemned by this Court. See Curlin v. Wetherby, supra.
I am convinced the plan proposed by the City of Lexington is not only unconstitutional but also is not supported by the statutory law of this state.
I would reverse the judgment.
I am authorized to state that HILL, J., joins me in this dissent.