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It appears the Anderson Public Library has for decades been taxing the public in violation of state law, and the ramifications for doing so could be tremendous.
A mighty bold statement? You bet, but the facts don’t lie.
We’ll explain why, but first a little background. The library is funded through what’s called a special taxing district, meaning it appears on your county property tax bill as a separate line item.
Each year, the boards that oversee the health department and library create budgets and set a tax rate on your property.
When you pay your taxes at the sheriff’s office, your money is divided among the school system, fiscal court, health, library, Extension and fire district, based on the rates set by each.
Pretty simple, huh?
Those rates, though, are never simple and are typically set by using the holy grail of Kentucky politics, House Bill 44.
That bill, a complicated, vague mess that involves unexplainable tax-rate formulas such as compensating rates and 4 percent caps, has been around and wildly abused since 1979, and is what our library and dozens just like use when setting their tax rates.
That bill is littered with attorney general opinions dating back to its inception, but is not what lawyers would call “black letter” law.
But KRS 173.790 is a black letter law, and is what libraries established as taxing districts before 1984 are supposed to use to raise or, heaven forbid, lower taxes.
Because reading the text of a law is nearly as boring as watching paint peel, we’ll summarize what it says.
The law plainly states that a library district created before 1984 is allowed to increase or decrease taxes only through the consent of voters in a general election.
Nothing vague about that, is there.
The law is so specific that it even dictates how the question must be posed on the ballot, and says a majority of voters must approve of the increase or decrease for it to happen.
All of which spells a heap of trouble for our library.
First, it was established in the mid-1960s, long before the cutoff year of 1984.
Second, when it was established by the fiscal court, magistrates at the time set the library’s tax rate at no more than 25 cents for every $1,000 of assessed property value. That means a person whose home was assessed at $100,000 would pay $25 on his or her tax bill.
Since its inception, though, no records exist of any public votes to increase the rate, which now stands at a teeth-clenching 88 cents per $1,000 and has increased around 150 percent since the year 2000. By comparison, the city government’s tax rate has declined 9 percent during the same period of time, thanks to elected officials who set responsible rates based on tremendous growth instead of taking advantage of it.
Now for those tremendous ramifications. Our library has collected millions upon millions of dollars in taxes since its inception.
During that time, it has accumulated a tremendous amount of cash by setting its rates well beyond what the public would have likely approved, and now has well over $1 million in reserves.
Were it wise, the library board would immediately place every dime of its reserves in an escrow account and leave it there, pending the outcome of a lawsuit that is coming to a head in Campbell County.
Later this week, a circuit court judge there is expected to hear arguments in a class-action suit brought by residents who have unearthed this problem and are demanding millions in damages. On Friday, the judge will be asked to consider a motion to force that county’s library board to place its funds in escrow, pending the outcome of the lawsuit. If that happens, lawyers with whom we’ve spoken say it will be a very telling indication on how this suit will be settled.
In their defense, those who have served on our library board cannot be said to have illegally set property tax rates with knowledge they were doing so. Comprised of citizens, the board typically follows the directives of the pedigreed librarians they hire, who in turn receive their marching orders from the state library board and its director.
But like telling the cop you didn’t see the 45 mph sign while he or she writes your ticket, ignorance of the law is never a plausible defense in court.
Now that the library board is no longer ignorant of this problem, it would be wise to take steps to protect the public’s money, and make sure that what’s left of the millions it has illegally collected is there, should a judge order it given back to its rightful owners, the taxpayers.