Corbin leaders furious over passage of bill to change occupational tax rules

Corbin leaders are boiling mad over amendments to a tax amnesty program that would significantly impact a four-year-long legal battle the city has going with the Knox County Fiscal Court over occupational tax revenues.

Both Houses of the Kentucky General Assembly approved House Bill 499 March 30 – a measure that deals with interest and collection fees for tax delinquencies, and allows the Revenue Cabinet to develop a process for information sharing between licensing agencies along with other revenue proposals.

Attached to the rather technical bill were several amendments, and it’s one by State Senator Robert Stivers (R-Manchester) that has the city’s elected officials in a twist.

Stivers has proposed changing the law to bar city taxpayers from claiming any credit or offset against a county occupational tax from applying "to a city and county unless both the city and county have both levied and are collecting license fees on March 15, 2012."

Corbin passed a citywide one percent occupational tax in 2005. Through an agreement with the Whitley County Fiscal Court, the city keeps 75 percent of revenue garnered from the tax in the Whitley County side of Corbin. But city leaders have never been able to reach a similar agreement with Knox County leaders, and so never collected the tax. Instead, the city filed a lawsuit in 2008 to settle a dispute over the issue. Corbin has long claimed city residents can claim a credit against the county tax, so that it would not "stack," – forcing Corbin residents and businesses in Knox County to pay two percent instead of just one.

For all intents and purposes, Corbin won the legal battle, but it will likely be for naught if Kentucky Gov. Steve Beshear signs the bill into law.

"He tacked it onto a popular bill that was needed because he knew it couldn’t stand on its own," McBurney said. "His amendment actually taints that bill. The way it was done was completely sleazy. It’s just one of those things that is disheartening. It has really hurt the city of Corbin. I don’t know why anyone would do something like that."

Originally, Stivers introduced the proposal in the Kentucky Senate as a standalone bill, but it had little momentum. He has defended the legislation as a way to protect Knox County. Without occupational tax revenues from the city of Corbin, he contends, the county would be unable to provide necessary services to its citizens.

Corbin leaders have argued that the county provides little to nothing to city resident who live in the Knox County side of Corbin. In any event, they said they have tried numerous times to work out a deal similar to the one hashed out with Whitley County, but have been rebuffed.

"We’ve put out the olive branch. We did it again just weeks ago, but they won’t take it," McBurney said. "There’s just nothing to this idea that we need more time to work out a deal. They don’t want any kind of deal. They just want all the money."

State Rep. Jim Stewart (R-Flat Lick), who represents Knox County in the Kentucky House of Representatives, suggested in floor discussions on the bill and amendments that the changes were necessary to provide Corbin and Knox County leaders more time to work out a deal.

Other local legislators worked against the bill.

Regina Bunch (R-Williamsburg), who represents all of Whitley County and a small portion of southern Laurel County, spoke against the amendments and voted against the final bill. It passed 69-18 in the House.

In the Kentucky Senate, Senate President David Williams (R-Burkesville), whose district includes the Whitley County side of Corbin, opposed the measure and offered his own amendment to the bill that would have forced a 50-50 split between the city and county. His amendment was removed. He was one of only two senators to vote against the bill. It won approval 34-2.

Corbin City Commissioner Joe "Butch" White, a local business owner and plaintiff in the lawsuit against Knox County over the issue, was none to kind when asked about Stivers’ legislative maneuvering.

"He’s a bully … He’s been there too long, way too long," White said. "Robert Stivers, in my opinion, is like the buildup in a 50-year-old septic tank."

White said he plans to support Stivers opponent, a Democrat, in the upcoming election.

McBurney said he is hoping Beshear vetoes the bill, but even if it happens it appears the votes are in place to override a veto.

Corbin leaders have vowed they will fight the measure, if signed into law, as "special legislation" in the courts. In Kentucky, it is unconstitutional for the state legislature to pass laws that unfairly target single communities or areas, or which focus on singular local problems.

"We fought this for so long for so many years. To be denied the outcome of our due process in court is just something that is inconceivable," McBurney said. "You see a lot of things in your lifetime. This is just hard to digest."