“…junk (opioids) is the inoculation of death that keeps the body in a condition of emergency.” Burroughs, William S., JUNKIE: Confessions of an Unredeemed Drug Addict.
Kentucky is one of the states most severely impacted by opioid drug abuse. As early as 1998, prescription drug abuse in Kentucky was sufficiently severe as to spur policy-makers into creating the Kentucky All Schedule Prescription Electronic Reporting Act (KASPER). With this system, policy-makers sought to monitor the medical use of controlled substances to dissuade prescription drug abuse. KASPER is a vital tool in providing data on prescription drugs. However, it has not been enough to prevent the death of many Kentuckians.
Since 1998, legislation requiring employers to select insurance policies that funds substance abuse treatment, expanding KASPER to make the data available to public safety persons, restrictions on prescription drug prescribing, and state funding for substance abuse treatment have all been signed into law in an effort to address Kentucky’s severe substance abuse problem. By 2000, despite these efforts to discourage prescription drug abuse, four Kentucky counties reached an overdose rate of more than 20 per 100,000 people. That number tripled in 2014 as 64 of Kentucky’s counties matched that overdose rate. https://www.healthy-ky.org/res/images/resources/Full-Substance-Use-Brief-Final_12_16-002-.pdf. Substance abuse data is collected based upon county of residence, thus city specific data is not available.
Substance Abuse substantially impacts our cities in Kentucky. In recent decades, cities have dedicated significant portions of every budget to counter the impact of the opioid epidemic. Initially the costs were simply the man hours spent by emergency responders combatting drug-related crime and rescuing neglected children. As the epidemic progressed, cities dedicated more resources to social services and public safety, floundering in the effort to save ravaged communities. Costs to the cities include lost productivity for workers, increased insurance costs, workers’ compensation claims, and unemployment insurance costs for effected employees, contamination remediation for drug affected properties, safety equipment for city workers to avoid needle sticks, etc.
Municipalities throughout the United States have suffered significant monetary losses, similar to those in Kentucky, linked to the opioid addiction epidemic. Recognizing that the pharmaceutical industry bears a significant amount of the blame, hundreds of local governments, insurers and other plaintiffs filed a class action lawsuit in seeking monetary damages in federal court. In Kentucky, over 50 counties have filed suit for damages.
Multi-party lawsuits seeking damages caused by the opioid epidemic are best litigated by lawyers who specialize in class action cases. Last year, a litigation group approached KLC seeking to represent municipalities interested in joining the lawsuit filed in federal court in Cleveland. After several meetings with the group, KLC retained the group to recover damages from losses sustained in our workers’ compensation insurance department for opioid prescriptions. There are no up-front costs to KLC; instead, the litigation group recovers its fees if it is successful in winning the case. This type of fee arrangement is called a contingency fee.
KLC is offering to facilitate a meeting for any group of cities interested in discussing whether to pursue this type of litigation as a class.
For more information regarding drug abuse policies please see the following:
Please contact Morgain M. Sprague, Director of Municipal Law and Training with any questions at (859) 977-4212.
 Eiselt, Erich, “Too Much of a Bad Thing: Municipalities and the Opioid Curse.” Municipal Lawyer: The Journal of Local Government Law March-April 2018: pp. 6-15. Print.
City Information Reporting Deadline for City Clerks -- January 31
KRS 83A.085 requires the city clerk to provide to the Department for Local Government (DLG) a list containing the names of the mayor, legislative body members, and the following appointed officials who are serving as of January 1 of each year:
a. City clerk;
b. City treasurer;
c. City manager;
d. City attorney;
e. Finance director;
f. Police chief;
g. Fire chief; and
h. Public works director.
In addition, the clerk should also provide the correct name of the city, mailing address for city hall, telephone number of city hall and the name and telephone number of either an elected or appointed official to serve as a contact person that may be reached during normal business hours of 8:00 a.m. to 4:30 p.m.
The form http://kydlgweb.ky.gov/Documents/Cities/City%20Official%20Updates%20FORM%20FY%202018-revised2-17.xls provided by DLG identifies the information needed. This information must be received by DLG no later than January 31 of each year. The Kentucky League of Cities is also requesting that this information be sent to KLC, so that we will also have the most accurate information. Information on how to submit this form for both entities is below.
Cities and Special Districts Branch
Department for Local Government
1024 Capital Center Drive, Ste. 340
Frankfort, KY 40601
Kentucky League of Cities
100 East Vine Street, Ste. 800
Lexington, KY 40507
The Next Step for Cities Considering Franchise Fees for Telecommunications Companies
In June we notified members of the victory our cities experienced in the Kentucky CATV Association Inc. v. City of Florence et al. case. To recap, the Kentucky Supreme Court decided that cities can opt-in to the telecom tax scheme under KRS 136.660(1)(a-c) to continue receiving disbursements from the state pool OR the cities can exercise the power granted under the Kentucky Constitution to impose franchise fees on telecommunications companies.
Since we published the article explaining this case in June, KLC has been working with the Kentucky Department of Revenue to figure out how to move forward after this ruling. As you can imagine, there are many logistical issues including: When to opt-out? Who to notify if the city decides to opt-out? What factors should cities consider in deciding whether to opt-in or opt-out? What is the process for notifying companies? Is it final once a city decides?
The Kentucky Department of Revenue has developed a fact sheet with KLC’s assistance that is attached to this article. It explains some of the above questions and provides a lot of information. KLC recommends that each city take some time in deciding what the next steps are. While many cities were not receiving revenue to which they were entitled under the Constitution, some cities may benefit for remaining in the telecom tax scheme. Carefully calculating current receipts from the telecom tax scheme and balancing those against the potential receipts under a franchise fee as well as whether the funds would exceed the property tax and franchise fee components of its 2005 tax base, may take time and will require careful consideration.
If you have any questions regarding this or any other issues please contact Morgain Sprague at email@example.com
Local Jurisdictions Considering Implementation of Utility Franchise Fees
On June 15, 2017, the Kentucky Supreme Court (Kentucky CATV Association Inc. v. City of Florence, 520 S.W.3d 355, (Ky. 2017)) determined that the General Assembly did not have the power under Ky. Const. §181 to prohibit municipalities from collecting franchise fees from utilities in exchange for use of their rights-of-way, as that power was constitutionally granted to local municipalities pursuant to Ky. Const. §§ 163 and 164.
The telecom taxes imposed under KRS 136.604 and 136.616 were originally enacted as part of Tax Modernization in 2005 (HB 272). Effective January 1, 2006, the bill replaced the franchise value property tax and franchise fees on telecommunications companies with a 3% excise tax on multichannel video programming services and separate gross revenues tax rates on multichannel video programming services and communications services (2.4% and 1.3% respectively). With this legislation, existing local franchise fee collections were purportedly prohibited.
Because of this Supreme Court decision, some local jurisdictions are considering whether to renew or establish a franchise fee on cable service and/or communications service instead of relying on receipts from the state telecom taxes. Below are some key points cities and other jurisdictions should consider before activating any franchise payment provisions.
- Since 2006, cities, counties and other local jurisdictions throughout the Commonwealth have received monthly distributions of state telecom receipts electronically deposited into their bank accounts. The combined amounts for all jurisdictions annually totals $36.4 million.
- According to the provisions of KRS 136.660(4), any political subdivision that chooses to impose a franchise fee on any cable or communications service will forfeit distributions of all state telecom receipts (3% excise and 2.4% and 1.3% gross revenues taxes) during the time that any franchise fees are being collected. While each franchising jurisdiction should carefully evaluate its own unique situation, in many cases, the current distributions of state telecom taxes are and will continue to be greater than any revenues that might be generated from local franchise fees on cable services.
- Before a political subdivision begins a franchise fee imposition, it must notify the Department of Revenue in writing of the effective date of the franchise fee and that it is revoking its certified participation in the state telecom distribution fund. The Department requests a ninety-day notice before franchise fees begin.
- Cable companies and other utilities will need advance notification so they can perform any database changes needed to comply with new franchise fee requirements. Depending on the terms of the franchise, providers may also need time to communicate billing changes to the affected customer base. A ninety-day notice is a recommended minimum, but please consult with local providers to coordinate implementation details.
- Overall, cable receipts are in gradual decline statewide. In contrast, the annual state telecom distributions to local jurisdictions remains fixed at the statutorily set threshold of $36.4 million. While this amount does not fully cover the 2005 baseline, it will not decline under current law regardless of any further erosion of cable receipts.
- The repealed franchise value property tax component of cities’ historical tax base comprised, on average, at least 20% of their total collections amount. If a local jurisdiction elects to activate a franchise fee, the local jurisdiction would likely want to determine whether any new collections would exceed both the property tax and franchise fee components of its 2005 tax base to verify whether the decision to opt-out of participation with the state makes sound financial sense for the local jurisdiction.
If there are additional questions, please contact the Department of Revenue at 502-564-5170, option #2, or send an email to DOR.WEB.Response.Telecom@ky.gov.
On September 6, 2017, the U.S. District Court of Appeals for the Sixth Circuit issued a decision upholding legislative prayer in Bormuth v. County of Jackson, No. 15-1869. Some reading this may think, wait a second this case was decided this past February and changed our practices. This is true. However, the February 15, 2017 decision was issued by a three-judge panel. On February 27, 2017, the Sixth Circuit decided to rehear the case with all fifteen judges and vacated the previous decision. The underlying complaint alleged that the Jackson County Commission violated the Establishment Clause of the Constitution by asking persons to present to rise and assume a reverent position and a Commissioner offering a Christian prayer.
Bormuth argued that the courts should find the prayer in violation of the Establishment Clause in the Constitution because government officials were giving the prayer and the prayers were all Christian. It was his feeling that when a government official offers a public Christian prayer at a public meeting, it forces those present to worship Jesus Christ if they want to participate in government. He also believed that asking those present to rise and assume a reverent position was unduly coercive, forcing those present to submit to social pressure and worship a specified deity. The primary element of this case that differs from previously decided cases is that individual commissioners were offering the prayer, instead of guest preachers or outside individuals.
Most cases addressing whether government action has violated the Establishment Clause of the Constitution are subject to the Lemon test under which this case was first decided. Instead, the Sixth Circuit found that different standards apply to legislative prayer as the United States Supreme Court has found that legislative prayer “is deeply embedded in the history and tradition of this country.” Marsh v. Chambers, 463 U.S. 783 (1983). Instead, courts must focus on “whether the prayer practice fits within the tradition long followed in Congress and the state legislatures.” Town of Greece v. Galloway, 134 S.Ct. 1811, 1819 (2014). Each case overwhelmingly declines to analyze the content of the prayer refusing to subject prayer to a judicial determination of its sectarian nature. Instead the Town of Greece court stated that when the government invites prayer into the public arena it must allow the offeror to pray according to their beliefs.
What this means for our cities is that if our councils or commissions offer legislative prayer, there is no need to stress over the constitutionality. Instead, there are a few simple guidelines that may help. Is the prayer offered in a manner that allows the offeror to construct their own prayer? Is the council as a whole, mandating what religion or denomination must give the prayer? Is the prayer offered to focus the minds and hearts of the legislative members on their duties as public servants? Has any member of the legislative body commented that the prayer is offered with discriminatory intent? Is there any attempt to require all present to pray or any implication that if someone does not pray that they will not be taken seriously? These are some basic questions that can guide a local legislative body in constructing any prayer practice. As always, we recommend consulting with your city attorney in constructing this type of policy.
A link to the opinion can be found here:
If you have any questions please contact Morgain M. Sprague, KLC Managing Counsel for Member Legal Services at (859) 977-4212.
Standardized Occupational License Forms
On July 1, 2017, Kentucky finalizes the transition to a standardized occupational license tax forms for business reporting. Instead of trying to locate and select between different forms for over 200 taxing districts, businesses will now be able to use standardized forms to file with the local tax districts in which they owe taxes.
HB 277 of the 2012 Kentucky General Assembly established a process to phase in standardized forms for occupational license tax reporting. The legislation was a compromise between the business community and the local government associations to make filing easier for businesses while also ensuring that cities maintain taxing independence. The legislation was implemented in several phases, culminating in the requirement for local governments to accept approved standardized forms by July 1, 2017.
As the first step in implementing the legislation, the Secretary of State gathered all occupational license tax ordinances and forms from tax districts throughout the state. The ordinances and forms of each local taxing jurisdiction were placed on the Secretary of State’s website in November of 2012. Businesses have since been able to download these documents from the Secretary of State’s website, instead of having to contact various tax districts to access them. The Secretary of State maintains updated ordinances and forms as well as a spreadsheet of all occupational license tax rates by city and district. These rates are in a readily searchable format on the website, Microsoft Excel.
In the next phase, the Secretary of State worked with tax preparers and local tax administrators to create standard forms for tax districts that collect taxes for a single district. This single reporting form, complete with instructions, was codified in an administrative regulation in November 2016 and is available on the Secretary of State’s website at http://app.sos.ky.gov/occupationaltax/ as form OL-S Single Tax District, Occupation License Fee Return. And on March 3, 2017, the Dual Tax District Occupational License Fee Return was developed by the Secretary of State and codified in an administrative regulation, with instructions. It too is available on the Secretary of State’s website linked above. There are six districts effected by this change, which are Boyle County/Danville, Daviess County/Owensboro, Henderson County/City of Henderson, Jessamine County/Nicholasville, Rowan County/Morehead, and Taylor County/Campbellsville.
All tax districts that collect for either a single district or dual districts are required to accept the forms effective July 1, 2017.
For those tax districts that collect multi-district occupational taxes, the Secretary of State’s Office is working with stakeholders on the development of another form or forms. Until such a form or forms are adopted formally through the regulatory process, however, businesses reporting in these jurisdictions will likely want to continue using the multi-district return forms developed by local authorities in Boone, Kenton, Campbell, and Scott counties. KLC will make sure to update our members when there are additional developments on this work.