Monday, April 30, 2012

How Midway became a city of the fourth class, and how it points out a statewide problem

By Martha Groppo
University of Kentucky School of Journalism and Telecommunications

There’s a new line in the City of Midway’s proposed budget: $30,000 for snow removal. It is there because Midway recently became a fourth-class city, and it took quite a bit of political maneuvering to get that upgrade in classification from fifth class.

The 2011 passage of legislation making Midway a fourth class city took two years, thanks in part to the involvement of representatives of other small towns interested in reclassification. “Once you put a bill out, people will amend it,” said Rep. Carl Rollins of Midway, left, the sponsor of the bill. He said reclassification of one city always brings up the issue with other cities since the classification system has many problems.

Midway’s change drew widespread attention in January 2012, after the Woodford County Fiscal Court stopped removing snow on Midway streets for free. County Judge-Executive John Coyle cited the classification change, saying “it would be unfair” to treat the county’s two fourth class cities differently. Versailles, with a population of roughly 8,000, is also fourth class.

Midway’s population of 1,647 is well below the 3,000 minimum that was required for fourth class – and may still be the minimum, according to one legal theory.

Rollins said he first heard of the class-change idea in 2010 during discussions with Midway Mayor Tom Bozarth and the City Council. The council passed a resolution asking for a change in status just before the deadline for new bills in the legislature.

Council Member Sharon Turner, left, said the council sought the change because “one size doesn’t fit all,” and the fifth class status of Midway was not serving all of its needs. She said the desire to regulate alcohol sales was a primary motivator, but the council knew that the change would allow the city more control over other things, as well.

The resolution cited several reasons Midway merited reclassification, including its “substantially increased population” since the last census, its “unique features” that could attract tourists, its potential for growth and its desire to promote economic development. The resolution said that “Midway’s current classification as a city of the fifth class does not provide a suitable framework for its continued and future economic growth and development.”

“No two cities are alike,” said Turner, who signed the resolution as mayor pro tem. She said that compared to some other fifth class cities, Midway has a much more vibrant downtown with businesses that could benefit from the classification change.

Bozarth and City Clerk Phyllis Hudson signed a statement of their estimate of the population based on the city’s “current and future circumstances.” They said they believed the 2000 census had underestimated Midway’s population and that the city also had the potential for more growth if the classification could be changed.

The change from fifth to fourth class is more commonly requested than some other reclassifications, said J.D. Chaney, director of governmental affairs for the Kentucky League of Cities. He said the current classification system has “naturally created a sort of sweet spot for fourth class cities,” which get benefits like increased income from alcohol fees and taxes, while third-class cities have additional responsibilities, such as supporting a full-time fire department.

Rollins, left, proposed the change in status with an amendment to an unrelated House bill dealing with cities during the 2010 legislative session, but the bill died.

Rollins worked closely with Rep. Steve Riggs of Louisville, a fellow Democrat and chair of the House and Local Government Committee. “He was able to give me valuable advice about making it an amendment,” rather than a stand-alone bill, Rollins said. “It was easier to put it in as an amendment.”

Chaney said it is common for cities seeking reclassification to tag onto bills that seem to be moving, “out of legislative ease.” The amendment called for the reclassification of Midway, Guthrie in Todd County, Junction City in Boyle county and Sadieville in Scott County.

Rollins said Junction City’s presence on the bill generated opposition. Rollins said Sen. Tom Buford, a Nicholasville Republican whose district includes Junction City, supported the bill, but Republican Rep. Mike Harmon, right, of nearby Danville did not, so the bill died.

In February 2011, the City Council passed another resolution asking for a change in classification "based on the population, the geography and economic condition of the city," according to a meeting notice from City Hall. Rollins again took the request to the legislature, this time as a floor amendment attached to a Senate bill. The House passed the bill in early March, returning it to the Senate for approval, which followed.

Harmon again opposed the bill and was one of four House members to vote against it, but Rollins said Harmon was running for lieutenant governor and said “He wasn’t going to object this time.” In order to obtain passage of this second bill, Rollins needed support. “I worked to make sure Rep. Steve Riggs was OK with it,” Rollins said.

He also sought the approval of Sen. Damon Thayer, left, the Republican representing Sadieville and the chairman of the Senate State and Local Government Committee. Rollins said he thought Thayer and Bozarth’s shared connection to the horse industry and “because he and the mayor were good friends” may have helped get Thayer on board.

Bozarth attributed the bill’s final success to “teamwork” and said, “Without the cooperation between Sen. Thayer and Rep. Rollins, this bill would not have passed. This bill affected other cities as well and it passed for those cities as well.”

Discussion surrounded the bill because Midway did not meet the population requirement for a fourth class city in a constitutional provision that was repealed in a 1994 amendment, but remains in a state law.

Midway’s resolution suggested its population had been underestimated in the 2000 census by not counting students who live most of the year at Midway College, and that since the census the city had developed by rezoning the Midway Station development and building a new wastewater treatment plant.

The mayor and city clerk’s statement cited plans for future growth from the “revitalization of downtown Midway” and the development of a number of new businesses, including a nursing home. The statement said they believed Midway would “substantially attain a population in excess of 3,000 residents.”

On March 17, 2011, right after the bill passed, the 2010 census was released, showing Midway still in the lower half of the range for fifth class cities still in the law. Turner said that did not surprise her, and the council knew Midway would not have the minimum fourth class “population number technically on the books.” She said exceptions can be made “If you can prove that it [the city’s classification] really isn’t working for you.” She said if classification were based on population alone, many cities would need to change their classification from fourth to third class, but that they do not push for this because of the additional expenses they would have to incur.

Some confusion surrounds the system because the 1994 amendment to the constitution allows the legislature to use more flexible parameters of “population, tax base, form of government, geography, or any other reasonable basis.” However, the amendment also says, "The law pertaining to the classifications in effect at the time of adoption of this section shall remain in effect until otherwise provided by law,” and no concrete system was adopted after the amendment’s passage.

Rollins has said that the legislature has inherent power to classify cities without being bound by the old population categories, and a judge recently agreed.

Debate over the population requirement for reclassification led to a lawsuit in Boyle County. The Danville Liquor Mart and a Junction City resident attempted to stop the sale of alcohol in Junction City, on grounds that the city did not meet the population requirement for fourth class. Junction City’s class change made the 198-195 vote in favor of alcohol sales possible, and the resulting beer sales gave Liquor Mart competition.

In early March, Boyle Circuit Judge Darren Peckler granted Junction City’s motion to dismiss the case, saying the legislature had acted within the law when it granted Junction City fourth class status based on factors other than population. The ruling was apparently the first to clarify city-classification powers, though it does not have statewide authority. It has been appealed, so the Court of Appeals could set a clearer standard that would apply statewide.

Rollins said he and Riggs have discussed doing away with city classification altogether. “It’s sort of an outdated system,” Rollins said.

Chaney said the system “made a lot of sense in the late 1800s when it was adopted,” because it let the legislation “deal with like cities in a similar fashion.” This was important before 1980, when cities gained the power make most decisions on their own as long as they didn’t conflict with the constitution. “That largely eliminated a lot of the need for a classification system,” Chaney said.

Bozarth, former chair of the league’s classification committee, agreed. “City classification in Kentucky is an archaic process that needs to be revised,” he said. “I would like to see all cities be able to be treated the same. Only cities of the fourth and fifth class can institute a restaurant tax. This should be an option for all cities in the Commonwealth. We all should be on the same playing field and hopefully in the coming years we will see this change.”

Chaney said the League of Cities has been working on revamping the system, but “This session physically couldn’t get it drafted.” Because of all of the interests involved with city classification such as alcohol, fire, police and taxes, he said that the bill would probably have to be at least 800 pages long to deal with all of the statutes.

Despite the overwhelming nature of drafting comprehensive reorganization legislation, legislators are increasingly dissatisfied with the current system, Chaney said: “A lot of legislators have seen a decreased need for a classification because of home rule. I think they’ll continue to push the league to make a proposal.” He said such a proposal would potentially “pretty much treat all cities the same and eliminate most of the classifications.”

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