Lawsuit targets Greenup city tax

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July 21, 2012

Lawsuit targets Greenup city tax

Kenneth Hart The Independent The Daily Independent Sat Jul 21, 2012, 11:58 AM EDT

GREENUP — A Greenup County worker has filed a lawsuit challenging the legality of the city of Greenup’s recently enacted 1 percent payroll tax.

In the suit, filed in Greenup Circuit Court, Kyra Conley, an employee of the county child support office, alleges, among other things, that Greenup’s mayor and city council acted “arbitrarily and capriciously” in imposing the tax and that the levy and that the levy has place “an unfair and unwarranted burden on the underclass.”

Conley also maintains the ordinance was improperly enacted because the council conducted a second reading of it, rather than a new first reading, after the measure had been “substantially changed” from the initial reading.

Conley — described in the suit as a single mother of two daughters, both of them in college — is being represented in the suit by her boss, Greenup County Attorney Michael C. Wilson.

The payroll tax was approved at the council’s Feb. 28 meeting, by a vote of 4-2. Council members Mark Harris, David Abdon, David Black and Marty Stephens all voted yes. Joe Mantz and Amy Ferguson voted no. The levy went into effect April 1.

Greenup Mayor Lundie Meadow said he regretted the city had to pass the tax but that they had no other option to increase revenue. Kentucky law allows few other mechanisms for cities to generate revenue, including the payroll tax, net-profit tax and insurance premium taxes.

A number of county employees and elected officials opposed the levy, saying it amounted to a “courthouse tax” because the county is the largest employer located within Greenup city limits.

Conley’s lawsuit also contends the payroll tax ordinance is invalid because it contains language that creates both a payroll tax and a business tax, even though the city “had admitted it will seek no tax revenue from a business profit.”

The suit also maintains the payroll tax places an unfair burden on those who work in Greenup, but do not live there, to provide funding for city services, while at the same time asking “no sacrifice” from residents of Greenup, who benefit from those same services.

In Greenup’s response to the suit, filed by City Attorney R. Stephen McGinnis, the city denies Conley’s allegations and also maintains her action should be dismissed because it includes no “justiciable claim,” meaning a claim capable of being heard by a court.

In regard to Conley’s claim the payroll tax ordinance is illegal because it creates two separate taxes, McGinnis argues that interpretation of the measure is “in the hands of the court system of the Commonwealth of Kentucky,” and not the plaintiff. He also maintains that any public comments made by Greenup city officials about whether the city intends to collect tax on business profits are irrelevant because “a city speaks through its minutes.”

Also, McGinnis wrote, enforcement of the payroll tax ordinance “is the province of the executive branch of city government” and “not enough time has passed for enforcement of the tax itself for to have any history for the court to adjudge.”

The payroll tax is expected to generate $120,000 to $130,000 a year. Meadows has said the revenue will be used to pay down the city’s debt.

KENNETH HART can be reached at khart@dailyindependent.com or

(606) 326-2654.

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