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					UNOFFICIAL COPY AS OF 03/22/10                             08 REG. SESS.          08 RS BR 1055



        AN ACT relating to a utility gross receipts tax for schools.

Be it enacted by the General Assembly of the Commonwealth of Kentucky:

        SECTION 1.            A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

As used in Sections 1 to 14 of this Act:

(1)     "Cable service" has the same meaning as in KRS 136.602;

(2)     "Communications service" means the provision, transmission, conveyance, or

        routing, for consideration, of voice, data, video, or any other information signals

        of the purchaser's choosing to a point or between or among points specified by

        the purchaser, by or through any electronic, radio, light, fiber optic, or similar

        medium or method now in existence or later devised.

        (a)     "Communications service" includes but is not limited to:

                1.   Local and long-distance telephone services;

                2.   Telegraph and teletypewriter services;

                3.   Postpaid calling services;

                4.   Private    communications      services   involving   a   direct   channel

                     specifically dedicated to a customer's use between specific points;

                5.   Channel services involving a path of communications between two (2)

                     or more points;

                6.   Data transport services involving the movement of encoded

                     information between points by means of any electronic, radio, or other

                     medium or method;

                7.   Caller ID services, ring tones, voice mail, and other electronic

                     messaging services;

                8.   Mobile wireless service and fixed wireless service as defined in KRS

                     139.195; and



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                9.   Voice over Internet Protocol (VOIP).

        (b)     "Communications service" does not include any of the following if the

                charges are separately itemized on the bill provided to the purchaser:

                1.   Information services;

                2.   Internet access as defined in Section 1101 of the federal Internet Tax

                     Freedom Act as amended;

                3.   Installation, reinstallation, or maintenance of wiring or equipment on

                     a customer's premises. This exclusion does not apply to any charge

                     attributable to the connection, movement, change, or termination of a

                     communications service;

                4.   The sale of directory and other advertising and listing services;

                5.   Billing and collection services provided to another communications

                     service provider;

                6.   Cable service, satellite broadcast, satellite master antenna television,

                     and wireless cable service, including direct-to-home satellite service as

                     defined in Section 602 of the federal Telecommunications Act of 1996;

                7.   The sale of communications service to a communications provider that

                     is buying the communications service for sale or incorporation into a

                     communications service for sale, including:

                     a.    Carrier access charges, excluding user access fees;

                     b.    Right of access charges;

                     c.    Interconnection charges paid by the provider of mobile

                           telecommunications services or other communications providers;

                     d.    Charges for the sale of unbundled network elements as defined

                           in 47 U.S.C. sec. 153(29) on January 1, 2001, to which access is

                           provided on an unbundled basis in accordance with 47 U.S.C.



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                           sec. 251(c)(3); and

                      e.   Charges for use of facilities for providing or receiving

                           communications service;

                8.    The sale of communications services provided to the public by means

                      of a pay phone;

                9.    Prepaid calling services and prepaid wireless calling service;

                10.   Interstate telephone service, if the interstate charge is separately

                      itemized for each call; and

                11.   If the interstate calls are not itemized, the portion of telephone charges

                      identified and set out on the customer's bill as interstate as supported

                      by the provider's books and records;

(3)     "Department" means the Department of Revenue;

(4)     "Gross cost" means the total cost of utility services including the cost of tangible

        personal property and any services associated with obtaining the utility services

        regardless from whom purchased;

(5)     "Gross receipts" means all amounts received in money, credits, property, or other

        money's worth in any form, for furnishing utility services for consumption in this

        state and any services associated with obtaining the utility services, excluding

        amounts received from:

        (a)     Any excise tax, sales tax, or similar tax, fee, or assessment levied by the

                United States or any state or local political subdivision upon the purchase,

                sale, use, or other consumption of utility services that is permitted or

                required to be added to the sales price of the utility service. This exclusion

                does not include any amount that the provider has retained as a

                reimbursement for collecting and remitting the tax to the appropriate taxing

                jurisdiction in a timely manner;



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        (b)     Furnishing energy or energy-producing fuels, used in the course of

                manufacturing, processing, mining, or refining to the extent that the cost of

                the energy or energy-producing fuels used exceeds three percent (3%) of the

                cost of production; and

        (c)     Furnishing utility services which are to be resold;

(6)     "In this state" means within the exterior limits of the Commonwealth of Kentucky

        and includes all territory within these limits owned by or ceded to the United

        States of America;

(7)     "Person" means any individual, firm, corporation, joint venture, association,

        social club, fraternal organization, general partnership, limited partnership,

        limited liability partnership, limited liability company, nonprofit entity, estate,

        trust, business trust, receiver, trustee, syndicate, cooperative, assignee,

        governmental unit or agency, or any other group or combination acting as a unit;

(8)     "Provider" means any person receiving gross receipts;

(9)     "Purchaser" means the person paying for utility services;

(10) "Ring tones" has the same meaning as provided in KRS 136.602.

(11) "Satellite broadcast and wireless cable service" has the same meaning as in KRS

        136.602;

(12) "School district" means a school district as defined in KRS 160.010 and 160.020;

        and

(13) "Utility services" means the furnishing of communications services, cable

        service, satellite broadcast and wireless cable service, electric power, water, and

        natural, artificial and mixed gas, bottled gas, and propane.

        SECTION 2.          A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     It is the intent of the General Assembly to replace the utility gross receipts license



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        tax for schools authorized by KRS 160.613 to 160.617 with the tax imposed by

        Sections 1 to 14 of this Act, effective January 1, 2009. All levies imposed by

        school districts under the provisions of KRS 160.613 to 160.617 shall cease after

        December 31, 2008, and beginning on January 1, 2009, the levy imposed by this

        section shall instead apply on a statewide basis.

(2)     Amounts collected pursuant to the tax imposed by Sections 1 to 14 of this Act

        shall be distributed to school districts as provided in Section 5 of this Act.
        SECTION 3.         A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     Beginning January 1, 2009, a utility gross receipts tax is hereby imposed for the

        purpose of providing funding to support public schools in the Commonwealth.

        The tax shall be imposed at a rate of three percent (3%) of the gross receipts

        derived for the provision of utility services in this state.

(2)     For purposes of administering the tax imposed by this section, relating to the

        sourcing of communications services and the rights of customers, the provisions

        of KRS 136.602, 136.605, and 139.775 shall apply.

(3)     If any user of utility services purchases the utility services directly from any

        supplier who is exempt either by state or federal law from the tax imposed by this

        section, then the consumer shall be liable for the tax and shall pay the amount

        due directly to the department, in accordance with the provisions of Section 4 of

        this Act. The tax due shall be computed by multiplying the gross cost of all utility

        services received by three percent (3%).

(4)     To prevent actual multistate taxation of gross receipts from the furnishing of

        utility services, a provider shall be allowed a credit against the tax imposed by this

        section upon proof that the provider has paid a tax in another state for furnishing

        the same utility services to the same customer. The credit shall be an amount



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        equal to the lesser of the tax actually and legally paid in the other state or the

        amount of the tax due under this section.

        SECTION 4.          A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     The taxes imposed by Section 3 of this Act shall be due and payable monthly and

        shall be remitted to the department on or before the twentieth day of the next

        succeeding calendar month.

(2)     On or before the twentieth day of the month following each calendar month, a

        return for the preceding month shall be filed with the department. The return

        shall allocate gross receipts by school district in a manner determined by the

        department. Returns and related payments shall be transmitted electronically in a

        manner prescribed by the department.

        (a)     Persons subject to the taxes imposed by Section 3 of this Act may apply for a

                waiver from electronic submission requirements of this subsection by

                submitting the request on a form prescribed by the department. The request

                shall indicate the lack of one (1) or more of the following:

                1.   Compatible computer hardware;

                2.   Internet access; or

                3.   Other    technological     capabilities    determined     relevant   by   the

                     department.

(3)     For purposes of facilitating the administration, payment, or collection of the taxes

        levied by Sections 1 to 14 of this Act, the department may permit or require

        returns or tax payments for periods other than those prescribed in subsections (1)

        and (2) of this section.

(4)     The department may, upon written request received on or prior to the due date of

        the return or tax, for good cause satisfactory to the department, extend the time



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        for filing the return or paying the tax for a period not to exceed thirty (30) days.

(5)     Any person to whom an extension is granted and who pays the tax within the

        period for which the extension is granted shall pay, in addition to the tax, interest

        at the tax interest rate as defined in KRS 131.010(6) from the date on which the

        tax would otherwise have been due.

(6)     The department may promulgate administrative regulations in accordance with

        KRS Chapter 13A to establish requirements for carrying out Sections 1 to 14 of

        this Act.

        SECTION 5.          A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     (a)     The department shall use school district property tax data to develop a

                database listing the service addresses in each school district.

        (b)     The superintendent of each school district shall provide the district property

                tax rolls to the department in a manner determined by the department or, if

                the superintendent is not able to provide the necessary information, the

                department may obtain the information directly from the property valuation

                administrator in the county where the school district is located.

        (c)     The database shall be made available by the department to providers of

                utility services for use in determining the allocation of gross receipts to each

                school district.

(2)     (a)     The department and providers of utility services shall allocate tax payments

                among the various school districts in accordance with the database

                established under subsection (1) of this section, as adjusted by any

                agreements entered into under subsection (3) of this section or Section 6 of

                this Act.

        (b)     The department and providers of utility services shall not be responsible for



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                distribution errors, nor shall providers be subject to the payment of penalties

                or interest if allocations are made in accordance with information included

                in the database established by subsection (1) of this section, and any

                agreements entered into pursuant to subsection (3) of this section or Section

                6 of this Act.

(3)     If there is more than one (1) school district within a county, the districts may

        choose to allocate the taxes collected and distributed by the department in

        proportion to the number of pupils in average daily attendance in the districts by

        the final certification by the chief state school officer for the previous school year

        pursuant to the KRS 157.310 to 157.440. Implementation of this allocation shall

        be based on the following provisions:

        (a)     The participating districts shall provide a jointly executed agreement to the

                department thirty (30) days prior to the first distribution to be so allocated;

        (b)     The agreement shall remain in effect until one (1) of the participating

                districts notifies the department and any other participating districts by

                certified mail thirty (30) days prior to the effective date of any change in

                allocation that the agreement is dissolved; and

        (c)     The department shall make annual adjustments to allocations made

                pursuant to an agreement entered into under this subsection based upon

                changes in the number of pupils in average daily attendance in the

                participating districts as shown by the final certification by the chief state

                school officer for the previous school year pursuant to KRS 157.310 to

                157.440.

(4)     If there is a conflict regarding school district boundaries, the departm ent may,

        until the conflict is resolved, distribute the total tax revenues collected for the

        districts involved in the conflict proportionately to the districts based upon the



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        average daily attendance in the districts for the previous school year.
        SECTION 6.         A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     If the department determines that the allocation among districts as submitted by

        the taxpayer on the return varies from the information included in the database

        established pursuant to Section 5 of this Act, the department shall:

        (a)     Make a proposed administrative adjustment to correct the erroneous

                allocation going forward;

        (b)     Determine whether the erroneous allocation was used on prior returns and

                if it was, make a proposed administrative adjustment going back a

                maximum of one (1) year from the date the erroneous allocation was

                discovered; and

        (c)     Retain taxes collected and still on hand for distribution to the impacted

                districts that are related to the erroneous allocation until the proposed

                administrative adjustment becomes final.

(2)     Within ten (10) days of the discovery of the erroneous allocation, the department

        shall notify the taxpayer and the impacted school districts in writing of the

        allocation discrepancy, including the dollar amount at issue, the proposed

        administrative adjustment to be made, and the process for agreeing to or filing an

        exception to the proposed administrative adjustment.

(3)     The proposed administrative adjustment shall become final upon the earlier of

        the receipt by the department of written acceptance of the administrative

        adjustment by all impacted school districts or the expiration of forty-five (45) days

        from the date of the notice with no exception having been filed.

(4)     (a)     Exceptions to the proposed administrative adjustment shall be filed with the

                commissioner of the department, within forty-five (45) days from the date of



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                the notice, and shall include a supporting statement setting forth the basis of

                the exception. A copy of any exception filed shall also be mailed to the

                impacted utility services provider and any other impacted school district.

        (b)     After the exception has been filed, the impacted school district may request

                a conference with the department. The request shall be granted in writing

                stating the time and date of the conference. Other impacted school districts

                and the impacted utility services provider may also attend any conference.

                Additional conferences may be held upon mutual agreement.

        (c)     After considering the exceptions filed by the impacted school district,

                including any information provided during any conferences, a final ruling

                shall be issued by the department. The final ruling shall be mailed to all

                impacted school districts as well as the impacted utility services provider.

        (d)     The impacted school district filing the exception may request in writing a

                final ruling at any time after filing exceptions and a supporting statement,

                and the department shall issue the ruling within thirty (30) days after the

                request is received by the department.

        (e)     After a final ruling has been issued, the school district may appeal to the

                Franklin Circuit Court or to the Circuit Court of the county in which the

                school district is located.

(5)     The method and timing of the implementation of a final ruling that requires a

        reallocation of previously distributed tax receipts shall be determined by

        agreement of the impacted school districts, provided that any agreement allowing

        for adjustments to be made over time in the future shall not extend beyond four

        (4) years.

        (a)     The department shall, upon request of the impacted school districts, assist in

                the development of an agreement.



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        (b)     An agreement that requires distribution changes that vary from information

                in the database established by Section 5 of this Act shall be provided to the

                department so that distributions can be made in accordance with the

                agreement.

        (c)     If the impacted school districts fail to reach an agreement regarding the

                reallocation of previously distributed tax receipts, the department shall

                adjust distributions going forward for four (4) years so that at the expiration

                of four (4) years, the district that should have received the original

                distribution has recouped all of the funds distributed erroneously, and the

                district that erroneously received the funds has repaid all of the funds

                distributed erroneously.
        SECTION 7.          A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     The department shall distribute the taxes collected to each school district on a

        monthly basis. Distributions shall be made in accordance with the database

        established pursuant to Section 5 of this Act, as modified by any adjustments or

        agreements made pursuant to subsection (3) of Section 5 of this Act or Section 6

        of this Act.

(2)     From each distribution, the department shall deduct an amount which represents

        the proportionate share of the department's actual operating and overhead

        expenses incurred in the collection and administration of the taxes not to exceed

        one percent (1%) of the amount collected. The department shall report its actual

        expenses and the allocation of expenses among school districts to the Kentucky

        Board of Education on a quarterly basis.

(3)     As soon as practicable after each return is received, the department may examine

        and audit it. If the amount of tax computed by the department is greater than the



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        amount returned by the taxpayer, the excess shall be assessed by the department

        within four (4) years from the date prescribed by law for the filing of the return

        including any extensions granted, except as provided in this section. A notice of

        the assessment shall be mailed to the taxpayer.

(4)     In the case of a failure to file a return or the filing of a fraudulent return, the

        excess may be assessed at any time.

        SECTION 8.        A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     Taxes paid under Sections 1 to 14 of this Act shall be refunded or credited in the

        manner provided in KRS 134.580.

(2)     A request for refund or credit shall be made on a form prescribed by the

        department and shall contain all information required by the department.

(3)     No provider shall be entitled to a refund or credit of the taxes paid under Sections

        1 to 14 of this Act where the taxes have been separately stated on a bill to and

        collected from a customer, unless the amount of taxes collected from the

        customer are refunded to the customer by the provider.

(4)     Notwithstanding KRS 134.580, the department shall make authorized tax refunds,

        including interest, from current tax collections in its possession allocated for

        distribution to the affected district. Applicable school district distributions and the

        department administrative expense allocation provided for pursuant to Section 7

        of this Act shall be adjusted proportionately to reflect refunds paid. If sufficient

        funds are not available from the current distribution cycle, the department shall

        pay refunds from subsequent amounts collected for distribution to the affected

        district until all refund payments, including interest, have been completed.

        SECTION 9.        A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:



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Notwithstanding any other provision of law to the contrary, the commissioner of the

department shall waive any penalty, but not interest, where it is shown to the

satisfaction of the department that the failure to file or pay timely is due to reasonable

cause.

        SECTION 10. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

In making a determination of tax liability under Sections 1 to 14 of this Act, the

department may offset overpayments for any period, together with interest on the

overpayments, against underpayments for any other period, against penalties, and

against the interest on the underpayments.

        SECTION 11. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

Every provider shall keep records, receipts, invoices, and other pertinent papers in a

form required by the department for not less than four (4) years from the making of the

records unless the department in writing authorizes their destruction at an earlier date.

        SECTION 12. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

Any tax not paid on or before the due date shall bear interest at the tax interest rate as

defined in KRS 131.010(6) from the date due until the date of payment.

        SECTION 13. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

The department shall administer Sections 1 to 14 of this Act and shall have all of the

powers, rights, duties, and authority with respect to the assessment, collection,

refunding, and administration of the taxes levied by this chapter conferred generally

upon the department by the Kentucky Revised Statutes, including KRS Chapters 131,

134, and 135.



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        SECTION 14. A NEW SECTION OF KRS CHAPTER 136 IS CREATED TO

READ AS FOLLOWS:

(1)     Notwithstanding any other provision of law to the contrary, the president, vice

        president, secretary, treasurer, or any other person holding any equivalent

        corporate office of any corporation subject to Sections 1 to 14 of this Act shall be

        personally and individually liable, both jointly and severally, for the taxes

        imposed under Sections 1 to 14 of this Act. Neither the corporate dissolution or

        withdrawal of the corporation from the state nor the cessation of holding any

        corporate office shall discharge the foregoing liability of any person. The

        personal and individual liability shall apply to each person holding an applicable

        corporate office at the time the taxes become or became due. No person shall be

        personally and individually liable under this subsection if that person did not have

        authority to collect, account for, or pay over the taxes at the time that the taxes

        imposed by Sections 1 to 14 of this Act become or became due.

(2)     Notwithstanding KRS 275.150, 362.1-306(3) or predecessor law, 362.2-404(3), or

        any other provision of law to the contrary, the managers of a limited liability

        company, the partners of a limited liability partnership, and the partners of a

        limited liability limited partnership or any other person holding any equivalent

        office of a limited liability company, limited liability partnership, or limited

        liability limited partnership subject to Sections 1 to 14 of this Act shall be

        personally and individually liable, both jointly and severally, for the taxes

        imposed under Sections 1 to 14 of this Act. Neither the dissolution or withdrawal

        of the limited liability company, limited liability partnership, or limited liability

        limited partnership from the state nor the cessation of holding any office shall

        discharge the foregoing liability of any person. The personal and individual

        liability shall apply to each manager of a limited liability company, partner of a



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        limited liability partnership, and general partner of a limited liability limited

        partnership at the time the taxes become or became due. No person shall be

        personally and individually liable under this subsection if that person had no

        authority to collect, account for, or pay over the taxes at the time that the taxes

        imposed by Sections 1 to 14 of this Act become or became due.

(3)     "Taxes," as used in this section, shall include interest accrued at the rate provided

        by KRS 131.183 and all applicable penalties and fees imposed under this chapter

        and under KRS 131.180 and 131.990.

        SECTION 15. A NEW SECTION OF KRS CHAPTER 160.613 TO 160.617 IS

CREATED TO READ AS FOLLOWS:

(1)     It is the intent of the General Assembly to replace the utility gross receipts license

        tax for schools authorized by KRS 160.613 to 160.617 with the tax imposed by

        Sections 1 to 14 of this Act, effective January 1, 2009.

(2)     All levies imposed by school districts under KRS 160.613 to 160.617 shall cease

        on December 31, 2008, except that any amounts still due for tax periods prior to

        December 31, 2008, may be collected by or on behalf of school districts.

(3)     The authority of school districts to levy the taxes authorized by KRS 160.613 to

        160.617 is revoked on December 31, 2008.

(4)     Beginning on January 1, 2009, the levy imposed by Sections 1 to 14 of this Act

        shall instead apply on a statewide basis.
        Section 16. KRS 157.615 is amended to read as follows:

As used in KRS 157.611 to 157.640, unless the context requires otherwise:

(1)     "Available local revenue" means the sum of the school building fund account balance;

        the bonding potential of the capital outlay and building funds; and the capital outlay

        fund account balance on June 30 of odd-numbered years. These accounts shall be as

        defined in the manual for Kentucky school financial accounting systems;



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(2)     "Board of education" means the governing body of a county school district or an

        independent school district;

(3)     "Bonds" or "bonds of the commission" means bonds issued by the commission, or

        issued by a city, county, or other agency or instrumentality of the Board of Education,

        in accordance with KRS Chapter 162, payable as to principal and interest from rentals

        received from a board of education or from the department pursuant to a lease or from

        contributions from the commission, and constitute municipal bonds exempt from

        taxation under the Constitution of the Commonwealth;

(4)     "Department" means the State Department of Education;

(5)     "District technology plan" means the plan developed by the local district and the

        Department of Education and approved by the Kentucky Board of Education upon the

        recommendation of the Council for Education Technology;

(6)     "Equivalent tax rate" means the rate which results when the income from all taxes

        levied by the district for school purposes and income from the tax levied by the

        Commonwealth for school purposes and allocated to the district pursuant to

        Sections 1 to 14 of the Act is divided by the total assessed value of property plus the

        assessment for motor vehicles certified by the Department of Revenue as provided by

        KRS 160.470;

(7)     "Kentucky Education Technology System" means the statewide system set forth in the

        technology master plan issued by the Kentucky Board of Education with the

        recommendation of the Council for Education Technology and approved by the

        Legislative Research Commission;

(8)     "Lease" or "lease instrument" means a written instrument for the leasing of one (1) or

        more school projects executed by the commission as lessor and a board of education as

        lessee, or executed by the commission as lessor and the department as lessee, as the

        case may be;



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(9)     "Lease/purchase agreement" means a lease between the school district or the

        department and a vendor that includes an option to purchase the technology equipment

        or software at the end of the lease period;

(10) "Percentage discount" means the degree to which the commission will participate in

        meeting the bond and interest redemption schedule required to amortize bonds issued

        by the commission on behalf of a local school district;

(11) "Project" means a defined item of need to construct new facilities or to provide major

        renovation of existing facilities which is identified on the priority schedule of the

        approved school facilities plan;

(12) "School facilities plan" means the plan developed pursuant to the survey specified by

        KRS 157.420 and by administrative regulations of the Kentucky Board of Education;

(13) "Technology master plan" means the long-range plan for the implementation of the

        Kentucky Education Technology System as developed by the Council for Education

        Technology and approved by the Kentucky Board of Education and the Legislative

        Research Commission;

(14) "Unmet facilities need" means the total cost of new construction and major renovation

        needs as shown by the approved school facilities plan less any available local revenue;

(15) "Unmet technology need" means the total cost of technology need as shown by the

        approved technology plan of the local district; and

(16) "Eligible district" means any local school district having an unmet facilities need, as

        defined in this section, in excess of one hundred thousand dollars ($100,000) or a

        district qualifying for education technology funding.

        Section 17. KRS 160.470 is amended to read as follows:

(1)     (a)     Notwithstanding any statutory provisions to the contrary, no district board of

                education shall levy a general tax rate which will produce more revenue,

                exclusive of revenue from net assessment growth as defined in KRS 132.010,



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                than would be produced by application of the general tax rate that could have

                been levied in the preceding year to the preceding year's assessment, except as

                provided in subsections (9) and (10) of this section and KRS 157.440.

        (b)     If an election is held as provided for in KRS 132.017 and the question should

                fail, such failure shall not reduce the "...general tax rate that could have been

                levied in the preceding year...," referred to in subsection (1)(a) of this section, for

                purposes of computing the general tax rate for succeeding years.

        In the event of a merger of school districts, the limitations contained in this section

        shall be based upon the combined revenue of the merging districts, as computed under

        the provisions of this section.

(2)     No district board of education shall levy a general tax rate within the limits imposed in

        subsection (1) of this section which respectively exceeds the compensating tax rate

        defined in KRS 132.010, except as provided in subsections (9) and (10) of this section,

        KRS 157.440, and KRS 157.621, until the district board of education has complied

        with the provisions of subsection (7) of this section.

(3)     Upon receipt of property assessments from the Department of Revenue, the

        commissioner of education shall certify the following to each district board of

        education:

        (a)     The general tax rate that a district board of education could levy under the

                provisions of subsection (1) of this section, and the amount of revenue expected

                to be produced;

        (b)     The compensating tax rate as defined in KRS 132.010 for a district's general tax

                rate the amount of revenue expected to be produced;

        (c)     The general tax rate which will produce, respectively, no more revenue from real

                property, exclusive of revenue from new property, than four percent (4%) over

                the amount of revenue produced by the compensating tax rate defined in KRS



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                132.010, and the amount of revenue expected to be produced.

(4)     Upon completion of action on property assessment data, the Department of Revenue

        shall submit certified property assessment data as required in KRS 133.125 to the chief

        state school officer.

(5)     Within thirty (30) days after the district board of education has received its assessment

        data, the rates levied shall be forwarded to the Kentucky Board of Education for its

        approval or disapproval. The failure of the district board of education to furnish the

        rates within the time prescribed shall not invalidate any levy made thereafter.

(6)     (a)     Each district board of education shall, on or before January 31 of each calendar

                year, formally and publicly examine detailed line item estimated revenues and

                proposed expenditures for the subsequent fiscal year. On or before May 30 of

                each calendar year, each district board of education shall adopt a tentative

                working budget which shall include a minimum reserve of two percent (2%) of

                the total budget.

        (b)     Each district board of education shall submit to the Kentucky Board of

                Education no later than September 30, a close estimate or working budget which

                shall conform to the administrative regulations prescribed by the Kentucky

                Board of Education.

(7)     (a)     Except as provided in subsections (9) and (10) of this section and KRS 157.440,

                a district board of education proposing to levy a general tax rate within the limits

                of subsection (1) of this section which exceed the compensating tax rate defined

                in KRS 132.010 shall hold a public hearing to hear comments from the public

                regarding the proposed tax rate. The hearing shall be held in the principal office

                of the taxing district or, in the event the taxing district has no office, or the office

                is not suitable for such a hearing, the hearing shall be held in a suitable facility as

                near as possible to the geographic center of the district.



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        (b)     The district board of education shall advertise the hearing by causing the

                following to be published at least twice for two (2) consecutive weeks, in the

                newspaper of largest circulation in the county, a display type advertisement of

                not less than twelve (12) column inches:

                1.   The general tax rate levied in the preceding year, and the revenue produced

                     by that rate;

                2.   The general tax rate for the current year, and the revenue expected to be

                     produced by that rate;

                3.   The compensating general tax rate, and the revenue expected from it;

                4.   The revenue expected from new property and personal property;

                5.   The general areas to which revenue in excess of the revenue produced in

                     the preceding year is to be allocated;

                6.   A time and place for the public hearing which shall be held not less than

                     seven (7) days nor more than ten (10) days after the day that the second

                     advertisement is published;

                7.   The purpose of the hearing; and

                8.   A statement to the effect that the General Assembly has required

                     publication of the advertisement and the information contained herein.

        (c)     In lieu of the two (2) published notices, a single notice containing the required

                information may be sent by first-class mail to each person owning real property,

                addressed to the property owner at his residence or principal place of business as

                shown on the current year property tax roll.

        (d)     The hearing shall be open to the public. All persons desiring to be heard shall be

                given an opportunity to present oral testimony. The district board of education

                may set reasonable time limits for testimony.

(8)     (a)     That portion of a general tax rate, except as provided in subsections (9) and (10)



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                of this section, KRS 157.440, and KRS 157.621, levied by an action of a district

                board of education which will produce, respectively, revenue from real property,

                exclusive of revenue from new property, more than four percent (4%) over the

                amount of revenue produced by the compensating tax rate defined in KRS

                132.010, shall be subject to a recall vote or reconsideration by the district board

                of education as provided for in KRS 132.017, and shall be advertised as

                provided for in paragraph (b) of this subsection.

        (b)     The district board of education shall, within seven (7) days following adoption of

                an ordinance, order, resolution, or motion to levy a general tax rate, except as

                provided in subsections (9) and (10) of this section and KRS 157.440, which

                will produce revenue from real property, exclusive of revenue from new property

                as defined in KRS 132.010, more than four percent (4%) over the amount of

                revenue produced by the compensating tax rate defined in KRS 132.010, cause

                the following to be published, in the newspaper of largest circulation in the

                county, a display type advertisement of not less than twelve (12) column inches:

                1.    The fact that the district board of education has adopted such a rate;

                2.    The fact that the part of the rate which will produce revenue from real

                      property, exclusive of new property as defined in KRS 132.010, in excess

                      of four percent (4%) over the amount of revenue produced by the

                      compensating tax rate defined in KRS 132.010 is subject to recall; and

                3.    The name, address, and telephone number of the county clerk of the county

                      or urban-county in which the school district is located, with a notation to

                      the effect that that official can provide the necessary information about the

                      petition required to initiate recall of the tax rate.

(9)     (a)     Notwithstanding any statutory provisions to the contrary, effective for school

                years beginning after June 30, 1990, the board of education of each school



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                district shall levy a minimum equivalent tax rate of thirty cents ($0.30) for

                general school purposes. Equivalent tax rate is defined as the rate which results

                when the income collected during the prior year from all taxes levied by the

                district for school purposes and income from the tax levied by the

                Commonwealth for school purposes and allocated to the district pursuant to
                Sections 1 to 14 of the Act is divided by the total assessed value of property plus

                the assessment for motor vehicles certified by the Department of Revenue.

                School districts collecting school taxes authorized by KRS 160.593 to 160.597,

                160.601 to 160.633, or 160.635 to 160.648 for less than twelve (12) months

                during a school year shall have included in income collected under this section

                the pro rata tax collection for twelve (12) months.

        (b)     If a board fails to comply with paragraph (a) of this subsection, its members shall

                be subject to removal from office for willful neglect of duty pursuant to KRS

                156.132.

(10) A district board of education may levy a general tax rate that will produce revenue

        from real property, exclusive of revenue from new property, that is four percent (4%)

        over the amount of the revenue produced by the compensating tax rate as defined in

        KRS 132.010.

        Section 18. KRS 160.593 is amended to read as follows:

(1)     Any board of education of a school district may, after compliance with the public

        hearing requirement contained in KRS 160.603, levy school taxes authorized by KRS

        160.593 to 160.597, 160.601 to 160.611, 160.621 to 160.633, and 160.635 to

        160.648. The imposition of any tax levied under the provisions of 160.593 to

        160.597, 160.601 to 160.611, 160.621 to 160.633, and 160.635 to 160.648 shall be

        limited to the territory of the school district except as provided in subsection (2) of this

        section.



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(2)     Two (2) or more boards of education may agree in writing to levy identical school

        taxes authorized by KRS 160.605 to 160.611,[ 160.613 to 160.617,] and 160.621 to

        160.633. After the levying in each district so agreeing of a tax under the terms of such

        agreement, the receipts from said tax shall be held in a common fund and disbursed

        therefrom to each district on the basis of average daily attendance, as set forth in KRS

        160.644. Any districts levying taxes under the terms of such an agreement shall be

        deemed to constitute a combined taxing district for the purposes of reference in KRS

        Chapter 160.

        Section 19. KRS 160.613 is amended to read as follows:

(1)     For taxable periods ending prior to January 1, 2009, there is hereby authorized a

        utility gross receipts license tax for schools not to exceed three percent (3%) of the

        gross receipts derived from the furnishing, within the district, of utility services, except

        that "gross receipts" shall not include amounts received for furnishing energy or

        energy-producing fuels, used in the course of manufacturing, processing, mining, or

        refining to the extent that the cost of the energy or energy-producing fuels used exceeds

        three percent (3%) of the cost of production, and shall not include amounts received

        for furnishing any of the above utilities which are to be resold.

(2)     If any user of utility services purchases the utility services directly from any supplier

        who is exempt either by state or federal law from the utility gross receipts license tax,

        then the consumer, if the tax has been levied in the consumer's district, shall be liable

        for the tax and shall pay directly to the department, in accordance with the provisions

        of KRS 160.615, a utility gross receipts license tax for schools computed by

        multiplying the gross cost of all utility services received by the tax rate levied under

        the provisions of this section.

        Section 20. KRS 160.635 is amended to read as follows:

(1)     School taxes imposed under the provisions of KRS 160.593 to 160.597, 160.601 to



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        160.633, and 160.635 to 160.648 shall remain in full force and effect from year to

        year until the board of education reduces the rate in effect; however, at the time the tax

        is first levied the board may set a date on which the tax shall expire.

(2)     Any tax imposed by any school district under KRS 160.613 to 160.617 shall expire

        on December 31, 2008.
        Section 21. KRS 131.190 is amended to read as follows:

(1)     No present or former commissioner or employee of the department[ of Revenue],

        present or former member of a county board of assessment appeals, present or former

        property valuation administrator or employee, present or former secretary or employee

        of the Finance and Administration Cabinet, former secretary or employee of the

        department[Revenue Cabinet], or any other person, shall intentionally and without

        authorization inspect or divulge any information acquired by him of the affairs of any

        person, or information regarding the tax schedules, returns, or reports required to be

        filed with the department or other proper officer, or any information produced by a

        hearing or investigation, insofar as the information may have to do with the affairs of

        the person's business. This prohibition does not extend to information required in

        prosecutions for making false reports or returns of property for taxation, or any other

        infraction of the tax laws, nor does it extend to any matter properly entered upon any

        assessment record, or in any way made a matter of public record, nor does it preclude

        furnishing any taxpayer or his properly authorized agent with information respecting

        his own return. Further, this prohibition does not preclude the commissioner or any

        employee of the department[ of Revenue] from testifying in any court, or from

        introducing as evidence returns or reports filed with the department, in an action for

        violation of state or federal tax laws or in any action challenging state or federal tax

        laws. The commissioner or the commissioner's designee may provide an owner of

        unmined coal, oil or gas reserves, and other mineral or energy resources assessed under



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        KRS 132.820(1), or owners of surface land under which the unmined minerals lie,

        factual information about the owner's property derived from third-party returns filed

        for that owner's property, under the provisions of KRS 132.820(2), that is used to

        determine the owner's assessment. This information shall be provided to the owner on a

        confidential basis, and the owner shall be subject to the penalties provided in KRS

        131.990(2). The third-party filer shall be given prior notice of any disclosure of

        information to the owner that was provided by the third-party filer.

(2)     The commissioner shall make available any information for official use only and on a

        confidential basis to the proper officer, agency, board or commission of this state, any

        Kentucky county, any Kentucky city, any other state, or the federal government, under

        reciprocal agreements whereby the department shall receive similar or useful

        information in return.

(3)     Statistics of tax-paid gasoline gallonage reported monthly to the department[ of

        Revenue] under the gasoline excise tax law may be made public by the department.

(4)     Access to and inspection of information received from the Internal Revenue Service is

        for department[ of Revenue] use only, and is restricted to tax administration purposes.

        Notwithstanding the provisions of this section to the contrary, information received

        from the Internal Revenue Service shall not be made available to any other agency of

        state government, or any county, city, or other state, and shall not be inspected

        intentionally and without authorization by any present secretary or employee of the

        Finance and Administration Cabinet, commissioner or employee of the department[ of

        Revenue], or any other person.

(5)     Statistics of crude oil as reported to the department[ of Revenue] under the crude oil

        excise tax requirements of KRS Chapter 137 and statistics of natural gas production as

        reported to the department[ of Revenue] under the natural resources severance tax

        requirements of KRS Chapter 143A may be made public by the department by release



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        to the Environmental and Public Protection Cabinet, Department for Natural

        Resources.

(6)     Notwithstanding any provision of law to the contrary, beginning with mine-map

        submissions for the 1989 tax year, the department may make public or divulge only

        those portions of mine maps submitted by taxpayers to the department pursuant to

        KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined-out

        parcel areas. These electronic maps shall not be relied upon to determine actual

        boundaries of mined-out parcel areas. Property boundaries contained in mine maps

        required under KRS Chapters 350 and 352 shall not be construed to constitute land

        surveying or boundary surveys as defined by KRS 322.010 and any administrative

        regulations promulgated thereto.

(7)     Notwithstanding any other provision of the Kentucky Revised Statutes, the department

        may divulge to the applicable school districts on a confidential basis any utility gross

        receipts license tax return information that is necessary to administer the provisions of

        KRS 160.613 to 160.617 or Sections 1 to 14 of this Act.




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