Owensboro city officials' ongoing effort to forcibly annex several Daviess County Public Schools properties may be rooted in another controversial school annexation from 2015 that was ultimately decided by a Kentucky appeals court nearly three years ago.
The 2-1 Kentucky Court of Appeals decision from 2016 ruled that an election could not be held regarding the city of Mayfield's proposed annexation of several Graves County Schools properties because the board of education could not legally file a petition with the county clerk to certify such a referendum.
Earlier this week, Owensboro City Attorney Steve Lynn cited that ruling as at least one reason the city began to seek out DCPS properties that may fall within its legal right to annexation.
"I've been in state government and I've been in city government, and one of the things I've seen over those years is that everybody is looking at what somebody else does," Lynn said. "When, lo and behold, the city of Mayfield decision came out, you honestly take note of that. When we looked at that and then (noted) the close proximity that all of the schools had to the city boundary, we felt like this was justified."
The Owensboro City Commission heard first reading of the handful of ordinances on Tuesday that, if approved, would affect six schools and three support facilities and would thrust more than 1,000 employees under a higher occupational tax rate amounting to an immediate 1.43% cut in pay.
City officials claim that the proposals are intended to eliminate pockets of unannexed land that are surrounded by the city, skewing infrastructure funding and inadequately dispersing the provision of services. But both county school administrators and their employees are painting the proposed ordinances as unfair tax burdens that take advantage of educators and overextend of the city's power to grow.
In the Graves County decision, the appeals court found that two state statutes governing elections in opposition of proposed city annexations were in conflict, but that the newer of the two, Kentucky Revised Statute (KRS) 65.012, would supersede. It requires that petitioners be registered voters, that they include their date of birth on any petition and that they also must live within the district or jurisdiction that would be affected by the referendum. Since a school board cannot have a birth date, cannot register to vote and is not a living person, thereby precluding it from living on its own property, the appeals court decided such a petition was baseless.
Still, the elder of the two laws, KRS 81A.420 gives the right of a referendum petition to both property owners as well as residents of affected areas. If at least 50% of those parties sign onto a petition in opposition, the petition must be certified by the county clerk and taken up in the next general election by those affected individuals.
"... There is clearly a conflict between the two statutes at issue here," wrote Chief Appeals Court Justice Dennis Clayton in the majority opinion. "Either the board can file a petition pursuant to KRS 81A.420 or it cannot file a petition because it does not meet the requirements of KRS 65.012."
That decision overturned a Graves County circuit court ruling that had attempted to balance the two statutes in order to give both some effect. In his dissenting appeals court opinion, Justice Jeff Taylor said harmonization is a duty of the court when laws are in conflict, and he called the majority opinion both "unconstitutional" and "illogical."
"Under the majority's decision today, the only person(s) who can oppose annexation are registered voters who live in the areas affected by the annexation," he wrote. "Not only does this frustrate the legislative intent of the statute, I, frankly, find such a ruling to be unconstitutional. The majority has effectively held that corporations and other legal entities that own property but are not natural persons have no legal right to oppose an annexation due to the restrictive language of KRS 65.012. This does not comport with legislative intent or common sense. Additionally, the illogical effect of the majority's ruling would restrict a non-resident voter who owns property in the area to be annexed from opposing the annexation."
When Graves County Schools asked the appeals court to reconsider its majority decision, it declined to do so, and, upon being recommended to the Kentucky Supreme Court, the case was not heard.
At one point last year, the city of Mayfield threatened to sue the school board for failing to withhold the required 2% occupational tax rate within the city limits. Reached by phone on Thursday, Superintendent Kim Dublin said it had been the district's legal interpretation at the time that the annexation did not actually take effect until all of its legal avenues and appeals had been exhausted, in December 2017. Therefore, a 2% tax was collected by the district at the start of the new year in January 2018. Since then, she said, the school district and city have come to an agreement whereby the district will pay its back taxes over an extended period of time.
Still, at least one legal avenue may still be available to the district, she added. There is a night watchman who lives on the main school district campus near Central Elementary School. The resident, she said, has been accepted by the county and state as a legal resident of the district's property and is registered to vote within its voting precinct. Although the 60-day period of time by which that employee could have filed a petition in opposition of Mayfield's proposed annexation has long passed, Dublin said the district's attorneys are seeking another opinion by the Kentucky Court of Appeals as to whether he could be granted some leeway on filing the petition because of the contested nature of the annexation process all those years ago.
Regardless, she said, like what Daviess County Public Schools fears, the impact of the higher occupational tax on district employees has resonated.
"We felt exactly the same way as DCPS," she said. "We felt that it was taxation without representation for our employees. It is not money out of the district's funds, but it is money out of our employees' pockets, and that's what we had trouble with.
"It's been hard on a lot of people -- really hard," she said. "This is a lot of money."
As to the relationship the school district has maintained with the city of Mayfield since the proposed annexations were first heard, Dublin characterized it with one word: "Strained."
DCPS Board Attorney Sean Land said it would not be his recommendation to ever move school personnel onto the district's property as a resident, merely calling Graves County Schools' resident-employee a "creative tactic."
Furthermore, he said, DCPS' legal claim may have to do with the grounds of the city's proposed annexations alone. According to another city annexation law, the city can only annex properties that are contiguous or adjacent to existing city boundaries and that are urban or "urban in character." Land said there is plenty of evidence to prove that the latter portion of that legal test does not hold water in Owensboro's case.
"We believe there has to be a judicial determination on that," he said. "We’re dealing with properties that have been not developed on but have existed, with the exception of the new middle school, for many, many years. They’re not new construction. There is new construction occurring at Apollo High School and Daviess County High School, but the schools themselves -- the properties themselves -- have maintained their initial character since they were constructed. They’re educational facilities."
According to Lynn, the circumstances surrounding the Graves County appeals court decision does not give him or other Owensboro city officials any pause on their own annexation proposals.
"The case was decided by the court of appeals and ruled in favor of the city of Mayfield," he said. "... We’re going with what the precedent is as of now."
Both the city and school district's attorneys said they believe the Graves County case gives them some "legal precedence" to try Owensboro's proposed annexation in court.
"The city must think that they have the potential to win, and I think the county schools probably think that they have the potential to win," said Daviess County Judge-Executive Al Mattingly earlier this week. "So, it’s probably going to be fought out in court. It may take so long to sort this out. But, in the end, it lands at the feet of the state legislature; they’ve got to clean up this language, and I can guarantee you one thing: that the county will be recommending just that to the Kentucky Association of Counties."
An attorney representing the city of Mayfield in its legal dispute with Graves County Schools could not be reached Thursday.
Austin Ramsey, 270-691-7302, firstname.lastname@example.org, Twitter: @austinrramsey