Local leaders favor veto of law that impacts Corbin, Knox occupational tax fight

82nd District State Representative Regina Bunch, above, led an effort in the Kentucky House of Representives last week to defeat an amendment that affects occupational tax collection in the city of Corbin. The measure passed, and now she, and other Corbin leaders, are pushing for a veto.

Furious over the 11th hour passage of an amendment that would again affect the ongoing battle between Knox County and the City of Corbin over distribution of occupational taxes, Corbin city leaders are lobbying hard for a veto from Kentucky Gov. Steve Beshear.

In the final hour of the regular session of the General Assembly last Tuesday, House Bill 236, a bill that appropriated funding for the operation of the Transportation Cabinet, passed its final hurdle in the Kentucky House of Representatives 58-37 despite furious opposition and a stern floor speech against the measure by 82nd District Representative Regina Bunch.

“I know it’s late and unfortunately this is how things get accomplished, but personally I think it’s a shame that something that so adversely effects a local area is slid in at the last hour and not addressed in the light of day,” Bunch said on the House floor last Tuesday night. “It is upsetting, and I feel like we should be better than this.”

She received a round of applause from colleagues after the short speech. Her legislative district includes all of Whitley County and five precincts in southern Laurel County.

Bunch was criticizing the inclusion of an amendment by Kentucky Senate President Robert Stivers that would again essentially prevent Corbin from collecting any of the tax, despite past court decisions that would allow the city to do so.

The amendment — originally attached to House Bills 236, 301 and 369 — extends a moratorium on the issue that was set to end this summer. Under the new proposal, it would go until July 15, 2016. It also adds some new provisions. For instance, any interlocal agreements between cities and counties regarding occupational tax revenue already in place would be locked in place during the same period, even if they were set to expire sooner. The amendment prevents residents in the city of Corbin to credit occupational taxes they pay to the city against their county tax. Without that credit, the two taxes would stack, meaning citizens and business in the Knox County portion of Corbin would pay a two percent tax — something local leaders say is unfair and would have a crippling economic effect on the area.

“I think it is a manipulative way of getting things through that probably wouldn’t make it if addressed in a manner where we would have time to debate,” Bunch said Tuesday. “Unfortunately, because it was attached to the transportation funding, it had to go through or we would have had a special session.”

Stiver’s attached a similar amendment to a tax amnesty bill in 2012 that essentially stymied Corbin’s efforts to collect the tax. The city challenged that law as unconstitutional, arguing it was “special legislation” aimed only at affecting the situation between Knox County and Corbin. In Kentucky, it is illegal for the state legislature to pass laws that unfairly target single communities or areas, or which focus on singular local problems. The case is currently on appeal after Corbin lost the first round of that legal battle in Knox Circuit Court. Oral arguments on the issue will be heard before the Kentucky Court of Appeals on April 29.

Stivers defended the amendment during the session saying the current law regarding occupational taxes is unfair and needs to be changed.

“It’s unfair to the cities. It’s unfair to the counties. But most of all, it’s unfair to the individuals who live there. If you read the whole statute and understand the whole statute and how it works, it’s easily seen that is in unfair.”

Corbin leaders estimate that over $1 million in occupational taxes is collected out of the city of Corbin from its Knox County portion … none of which it gets to keep.

Stivers also defended his tactic of attaching amendments related to the occupational tax law onto bills that are, seemingly, unrelated instead of introducing it as separate legislation.

“The amendment will be voted up or down. I don’t know if it confuses the process …” Stivers said.

Bunch noted that while House members could have held a roll call vote on the amendments to the bill, the move could have caused problems. If any of the amendments failed, then the bill would have to go back to the Senate for consideration, which means it wouldn’t have passed at all before the regular session ended at midnight.

“Since we wouldn’t be passing what was sent to us, we’d have to send it back. It would have put us over the deadline,” Bunch said.

“I just wish it was something we discussed in the light of day and had the opportunity to address and weigh out the options instead of just slipping it in and hoping nobody will notice.”

Corbin Mayor Willard McBurney said city leaders are urging Beshear to veto all or portions of the bill that pertain the occupational taxes.

“I hope that can happen,” he said. “We are trying to get a line-item veto. If we don’t, I guess we are just screwed for now. That’s how I interpret it.”

McBurney said city leaders are working through the Kentucky League of Cities, a lobbying organization for most of the state’s cities, to secure a veto.

Bunch said she believes Beshear has the power to use his line-item veto to remove only the amendment in question. She said she favors such a veto.

Beshear has 10 days from the time a bill is passed to either sign it or issue a veto. If he does nothing, the bill automatically becomes law.

HB 236 was passed last Tuesday.