By Erica Horn and Maddie Schueler
The Kentucky Court of Appeals has reversed and remanded a decision of the Garrard Circuit Court upholding Garrard County’s 911 fee as a valid user fee. City of Lancaster, Kentucky et al. v. Garrard County, Kentucky, et al., Court of Appeals Case No. 2013-CA-000716-MR (Opinion, July 3, 2014).
The facts leading to this lawsuit began nearly two years ago. On August 13, 2012, the Garrard County Fiscal Court adopted Ordinance O-08-12-1, which replaces the subscriber charge on landline telephones used to help fund 911 emergency telephone service with a fee of $0.25 imposed upon each and every water meter in Garrard County. The ordinance also requires every water company, water association in Garrard County to collect and remit the fees. On November 9, 2012, a civil action was commenced in Garrard Circuit Court challenging the legality of the ordinance. See City of Lancaster, Kentucky et al. v. Garrard County, Kentucky, et al., Garrard Cir. Ct. Case No. 12-CI-00383. The lawsuit was filed against Garrard County, Kentucky, and the Garrard County Fiscal Court, alleging the ordinance is unconstitutional and collection of the fee is an unconstitutional taking of property.
While the Garrard Circuit Court agreed upheld the validity of the ordinance the ordinance Court of Appeals held the fee is not a valid user fee but instead an invalid tax. They claimed the circuit court erred in granting summary judgment upholding the validity of the fee. The Court of Appeals agreed. The court noted that, under Kentucky case law, a valid user fee exists where there is a reasonable relationship between the fee charged and the benefit received. Generally, the court stated, a user fee is imposed upon the recipient of a benefit received from the government or for a particular government service. The court gave as examples of valid user fees tolls paid by drivers for the use of a particular highway or fees paid by individuals with landline phones for the benefit of 911 service. The court found the fee of $0.25 upon each water meter imposed by Garrard County’s ordinance is not directly related to the benefit of 911 telephone service.
Although the court found the circuit court erred by granting summary judgment upholding the ordinance as imposing a valid user fee, the Court of Appeals did not reach the questions of whether the fee constitutes a license or a tax. The court directed the circuit court to consider these questions on upon remand. However, the court noted that if the circuit court finds the ordinance imposes a tax, both parties have conceded at oral argument that the tax would be unconstitutional and thus in violation of Kentucky law.
The author’s law firm represents amicus curiae in this litigation.