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Kentucky Court of Appeals Holds Taxes Collected by Planning Commission Are Valid

By Erica Horn and Maddie Schueler

The Kentucky Court of Appeals recently granted judgment in favor of the Northern Kentucky Area Planning Commission and Northern Kentucky Area Planning Council (collectively “NKAPC”), finding the collection of ad valorem taxes by the NKAPC was valid because the NKAPC had not been dissolved as provided by statute.  Kuhnhein v. Northern Kentucky Area Planning Comm’n and the Northern Kentucky Area Planning Council, 2014-CA-000468-MR (Ky. App. Sept. 11, 2015).  The NKAPC was formed in 1961 by adjoining Kenton and Campbell counties in Northern Kentucky pursuant to KRS § 147.610, which permits the creation of an area planning commission “[i]n any two (2) or more adjacent counties, one (1) of which has a city having a population of more than 50,000 and not more than 200,000 inhabitants as declared by the last federal census”.  The City of Covington in Kenton County then had a population of more than 50,000 inhabitants. 

Pursuant to KRS § 147.660(1), a validly created area planning commission is a political subdivision “in perpetual existence, with power to . . . levy an annual tax” to defray necessary and incidental expenses of the commission.  The statute also provides a method for dissolving a commission, and provides that any member county of an area planning commission may withdraw its membership but, the commission would continue to function with the remaining county members. 

In 1984, Campbell County withdrew from the NKAPC by following the process outlined by statute, and, in 2008, the City of Covington’s population dropped below 50,000.  Nevertheless, the NKAPC continued to operate as an area planning commission comprised of Kenton County and various cities within its territory, and the NKAPC continues to assess ad valorem taxes to fund its operations. 

This action was filed by Garth Kuhnhein, a resident of Kenton County.  Mr. Kuhnhein alleged the assessment and collection of ad valorem taxes by the NKAPC was invalid because the commission no longer meets the requirements of an area planning commission under KRS § 147.610.  The Kenton Circuit Court granted summary judgment in favor of the NKAPC. 

The Kentucky Court of Appeals affirmed.  The court noted the statutory procedures for dissolving the NKAPC had not been successfully followed; therefore, the commission continued to exist.  Although the court noted there may be “some rational logic” to Mr. Kuhnhein’s position, it held the statute was clear that the NKAPC could only be dissolved by following the necessary statutory procedures.  The court found that accepting Mr. Kuhnhein’s argument “would be repugnant to the constitutional doctrine embodied in Sections 27 and 28 of the Kentucky Constitution [separation of powers]”, as the dissolution of an area planning commission is power exercised by the legislative department of the government and may not be exercised by the judiciary.

Whether a motion for discretionary review will be filed with the Supreme Court of Kentucky is unknown at this time.