KRS 67C.147: Taxes and services in area of former city of the first class -- Imposition of

different tax rates -- Separate rates for land and improvements -- Urban

service tax district -- Reporting requirements -- Modification of boundaries --

Reimbursement to fire districts operating into the area of the urban service tax

district -- Use of revenue from differential tax rate.

(1) In order to maintain the tax structure, tax rates, or level of services in the area of the

consolidated local gover nment formerly comprising the city of the first class, the

legislative council of a consolidated local government may provide in the manner

described in this chapter for taxes and services within the area comprising the

former city of the first class which are different from the taxes and services which

are applicable in the remainder of the county. These differences may include

differences in tax rates upon the class of property which includes the surface of the

land, differences in ad valorem tax rates up on personal property, and differences in

tax rates upon insurance premiums.

(2) (a) Any difference in the ad valorem tax rate on the class of property which

includes the surface of the land in the portion of the county formerly

comprising the city of the f irst class and in the portion of the county other

than that formerly comprising the city of the first class may be imposed

directly by the consolidated local government council.

(b) For purposes of this section, the consolidated local government council m ay

by ordinance adopt the following two (2) distinct subclassifications of real

property for purposes of taxation within the portion of the county formerly

comprising the city of the first class:

1. "Land," which means the surface of the earth and its natu ral resources,

exclusive of any human -made structures, cultivated agricultural

products, or artificial improvement or alteration to the land; and

2. "Improvements," which means any human -made addition to or

modification of land that enhances its value, including but not limited to:

a. Any building, structure, fence, or pavement constructed upon the

land;

b. Any cultivated agricultural products grown upon the land; and

c. Any artificial land backfill, grading , or site preparation aimed at

modifying the natural topography.

(c) The council may levy a separate ad valorem tax rate on land and a separate ad

valorem tax rate on improvements within the portion of the county formerly

comprising the city of the first class. The rate levied on improvements may be

lower than the rate levied on land. The rate levied on improvements shall be

sufficient to constitute a bona fide tax levy.

(d) Notwithstanding KRS 132.010, for any tax year in which separate rates are

levied under this subsection, the compensating tax rate shall be calculated as

the specific combination of rates on land and improvements so that when

applied to the current year's assessment, it produces an aggregate revenue

equal to the revenue produced in the preceding year.

(e) Notwithstanding KRS 132.010 and 132.017, the portion of a tax rate that is

subject to recall in relation to producing revenue exceeding four percent (4%)

over that produced by the compensating tax rate shall be determined based on

the aggregate revenue produced by the combination of the rate levied on land

and the rate levied on improvements.

(f) Notwithstanding KRS 132.810, the homestead exemption shall be applied

first against the assessed value of improvements, and any remaining balance

of the exemption shall then be applied against the assessed value of land.

(3) Any change in these ad valorem tax rates shall comply with KRS 68.245, 132.010,

132.017, and 132.027 and shall be used for services as provided by KRS 82.085.

(4) If the consol idated local government council determines to provide for tax rates

applicable to health insurance premiums and personal property which are different

in the area formerly comprising the city of the first class than the rates applicable in

the remainder of the county, it shall do so in the following manner. The

consolidated local government council shall by ordinance create a tax district to be

known as the "urban service tax district" bounded by the former boundaries of the

former city of the first class. T he ordinance shall designate the number of members

of the board of this tax district and the manner in which they shall be appointed.

The ordinance shall provide that the board of the tax district shall receive the

income derived from the differential tax rate applicable in the area formerly

comprising the city of the first class with respect to personal property, health

insurance premiums, or both, and shall contract with the consolidated local

government to pay all sums collected to the consolidated local government, in

return for the provision of services performed by the consolidated local government

within the area formerly comprising the city of the first class which services are in

addition to services performed by the consolidated local government in the

remainder of the county. The consolidated local government shall provide at least

an annual reporting to the urban service tax district board and the legislative body

of the consolidated local government containing but not limited to detailed

operating and capital expenditures of each service performed by the consolidated

local government.

(5) After the initial formation of an urban service tax district in a consolidated local

government, the boundaries of the district may be modified in the following

manner. The proposal to alter the boundaries of the urban service tax district within

a consolidated local government may be initiated by:

(a) A resolution enacted by the consolidated local government describing the

boundaries of the area to be added to or deleted from the tax district and duly

passed and signed by the mayor not less than one hundred twenty (120) days

before the next regularly scheduled election day within the county; or

(b) A petition signed by a number of qualified voters living within pr ecincts

within the area to be added to or deleted from the tax district equal to ten

percent (10%) of the votes cast within each precinct in the last general

election for President of the United States and delivered to the clerk of the

legislative council more than one hundred twenty (120) days next preceding

the next regularly scheduled election day within the county.

The boundaries so described in either case shall not cross precinct lines. The

question of whether the area bounded as described should be added to or deleted

from, as the case may be, the urban service tax district shall then be placed upon the

ballot in the precincts in the area to be added or deleted at the next regular election

and the question stated on the ballot shall be so phrased tha t a "Yes" vote shall be

cast in favor of making the proposed change and a "No" vote shall be cast to oppose

the proposed change. If a majority of those voting in those precincts support the

change, then the change in the boundaries of the urban service tax district shall be

implemented.

(6) (a) Beginning with emergency medical responses made on or after July 1, 2025,

the consolidated local government shall reimburse a fire district operating

under KRS Chapter 75 for expenses related to each emergency medica l

response made by the fire district operating under KRS Chapter 75 into the

area of the urban service tax district. A fire district so responding shall receive

from the consolidated local government three hundred dollars ($300) for

transporting a person a nd one hundred fifty dollars ($150) for arriving at

person's location when no person is transported.

(b) The payment established in paragraph (a) of this subsection shall be in

addition to any insurance moneys the fire district may be eligible to receive

resulting from the response.

(c) The payment established in paragraph (a) of this subsection shall be adjusted

on July 1 of each year by the percentage increase in the nonseasonally

adjusted annual average Consumer Price Index for All Urban Consumers

(CPI-U), U.S. City Average, All Items, between the two (2) most recent

calendar years available, as published by the United States Bureau of Labor

Statistics.

(d) The consolidated local government shall not charge a fire district operating

under KRS Chapter 75 for any expenses or services that the consolidated local

government was not charging the fire district prior to January 1, 2024.

(e) A fire district operating under KRS Chapter 75 that receives payment or

reimbursement in any form from the consolidated loca l government for an

emergency medical response made by the fire district into the area of the

urban service tax district prior to July 1, 2025, shall not be eligible for

payments or reimbursement under this subsection beginning on July 1 of the

following fiscal year and continuing until the end of that fiscal year.

(7) Except for services provided within the central business district as defined by the

consolidated local government via ordinance as of April 1, 2024:

(a) From July 1, 2025, to June 30, 2028, t he differential tax received by the urban

service tax district shall fund no less than eighty -five percent (85%) of all

costs related to the services provided, including capital expenditures related to

the services, within the urban service tax district by the consolidated local

government as set out in this section that are in addition to the services

performed by the consolidated local government in the remainder of the

county;

(b) From July 1, 2028, to June 30, 2031, the differential tax received by the urban

service tax district shall fund no less than ninety percent (90%) of all costs

related to the services provided, including capital expenditures related to the

services, within the urban service tax district by the consolidated local

government as set out in this section that are in addition to the services

performed by the consolidated local government in the remainder of the

county;

(c) From July 1, 2031, to June 30, 2034, the differential tax received by the urban

service tax district shall fund no less than ninety -five percent (95%) of all

costs related to the services provided, including capital expenditures related to

the services, within the urban service tax district by the consolidated local

government as set out in this section that are in add ition to the services

performed by the consolidated local government in the remainder of the

county; and

(d) After June 30, 2034, the differential tax received by the urban service tax

district shall fund no less than one hundred percent (100%) of all cost s related

to the services provided, including capital expenditures related to the services,

within the urban service tax district by the consolidated local government as

set out in this section that are in addition to the services performed by the

consolidated local government in the remainder of the county.