November 19, 2017

KY Appeals Court: Library Taxes Legal

Update: The Kentucky Supreme Court announced on December 18 that it has declined to hear arguments in the lawsuit. Kentucky libraries’ method for setting their tax rates will stand. According to the Kentucky Enquirer, Kenton County public library executive director Dave Schroeder said, “We are pleased that both the Court of Appeals and the Supreme Court have recognized that the way that the library has been setting our tax rate is legal and proper and has been so for the last 40 years. We can now focus all of our energy on providing the best service and materials to the residents of Northern Kentucky and Greater Cincinnati.”

KPLA_WebHeaderLibrary officials across Kentucky exhaled with relief on Friday, March 20, after the state Court of Appeals ruled that systems in two northern counties correctly and legally set their annual tax rate based on a decades-old law that allows revenue to be raised without voter approval. The decision reversed two lower-court verdicts and means the Campbell and Kenton County systems will not have to roll back their tax rates 35 years or more, which would have triggered staff layoffs, branch closures, and other draconian cuts.

The 3–0 ruling may spell the end a three-year legal challenge waged mainly by members of the Tea Party, one that threatened to nullify the way in which not only these two districts, but more than 90 of the state’s 105 districts employ the taxation method that survived the legal challenge. Had the Campbell and Kenton districts lost their appeal, it’s possible the court could have abruptly declared that library tax rates throughout the state were invalid. (For the full text of the decision and excerpts from local press coverage, see infodocket.com.)

A taxing debate

The case hinged on which of two conflicting Kentucky statutes—both involving a legal mechanism known as a special taxing district—gained precedence in the appeals court’s eyes.

KRS 132.023 allowed for the creation of the Campbell and Kenton County libraries as two of these taxing districts. Kenton County Public Library (KCPL) was formed in 1967 and Campbell County Public Library (CCPL) in 1978. Once enough signatures on a petition were collected, the systems gained the power to raise tax revenue without having to hold votes on the increases, which were capped at 4 percent annually.

Plaintiffs, however, felt these taxes were collected in violation of KRS 173.790, which they argued mandated a separate petition drive every time the tax rate was increased. Since none had occurred in decades, they sued for a refund of overpaid taxes and argued that the Campbell and Kenton County rate should be rolled back to the figure used when those libraries were first formed.

The libraries initially lost in separate circuit court decisions, before individually seeking relief from the appeals court. Oral arguments were heard in December, and on March 3, the court decided to consolidate the cases and issue one binding decision.

In that 24-page decision, the court noted that the Kentucky Department for Library and Archives has spent more than 30 years instructing library systems to set their tax rates in accordance with KRS 173.023 (also known as House Bill 44).

The court wrote, “For over thirty years, without protest or challenge, the library districts created by petition have acted in good faith and conducted their affairs in accordance with the directions of the Executive Branch, which was charged by law to implement the applicable statutes in question.

“[I]n the absence of any legislative action over the past thirty-plus years that would alter our opinion today, we are reminded by former Chief Justice Palmore that “[w]hen all else is said and done, common sense must not be a stranger in the house of the law.”

The Supreme authority

While the appeals court opinion stated “[W]e believe the ultimate recourse for statutory change lies in the General Assembly, not the courts,” there is still one judicial avenue remaining for plaintiffs: the Kentucky Supreme Court. They have 30 days from March 21 to file a motion for discretionary review, a court official told LJ, and the top court would then accept or decline the case.

“There’s been some discussion on that,” Garth Kuhnhein, a plaintiff in the Kenton County case, told LJ on Monday. He declined any further comment.

“We do expect it to be appealed by the other side,” Collins said.

Library supporters celebrate

“Today was a good day,” attorney Jeffrey Mando, who represented the Campbell County Public Library (CCPL), told Library Journal on Friday. “I found the language that the court used to be quite powerful. They adopted the position that we advocated all along. I was also buoyed by the fact that it was a unanimous decision.”

“I was ecstatic, of course,” Campbell County library director J.C. Morgan told LJ. “We thought we’d been doing it the right way all these years. To have it upheld in the court was beautiful. It’s an incredible amount of relief.”

Added Dave Schroeder, library director in Kenton County, “I haven’t had such a good day in years. It’s a real vindication for our board of trustees”

“I think for most of us, we feel like we are now able to move on and plan for the future,” said Mary Lynn Collins, president of Friends of Kentucky Libraries, a statewide advocacy organization. “It was a cloud hanging over us.”

On Friday, as news of the court decision spread, Collins described fielding a swarm of happy texts and emails from a number of library supporters and patrons. “It was a virtual dancing in the streets,” she said.

On Friday, a joint statement from ALA President Courtney Young and Public Library Association (PLA) President Larry Neal stated, “The ALA and PLA would like to extend our congratulations to the Kentucky Library Association for their efforts to win this appeal and to safeguard library service within Campbell and Kenton counties, and within the Commonwealth of Kentucky.”

Brandon Voelker, lead attorney for the plaintiffs, had not responded to LJ’s request for comment at press time. Campbell County Commissioner Charlie Coleman, one of the plaintiffs, declined to comment.

Planning for the worst

John Chrastka, a 2014 LJ Mover & Shaker and founder and executive director of EveryLibrary, a national PAC that provides money and advocacy in support of library funding initiatives, said his group had geared up to spend as much as $500,000 to promote petition drives in some 99 Kentucky counties (about $5,000 per county) to try to quickly pass new library budgets. Collins added that Friends of Kentucky Libraries was also prepared to act quickly in support of petition drives, and the American Library Association had already stated in February that it was prepared to assist, if necessary with “local referenda” through “training, consulting and resources.”

Naturally, however, these forces are glad such strenuous stop-gap maneuvers won’t be needed. “I’m glad that the next time we have to talk to voters in the state of Kentucky it’s not in this circus atmosphere,” said Chrastka.

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