AN ACT relating to the fiscal reporting of local entities.

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AN ACT relating to the fiscal reporting of local entities. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 65A.030 is amended to read as follows: 3
(1) For fiscal periods beginning on or after July 1, 2014, requirements relating to audits 4
and financial statements of special purpose governmental entities are as follows: 5
(a) Every special purpose governmental entity with the higher of annual receipts 6
from all sources or annual expenditures of less than five hundred thousand 7
dollars ($500,000)[one hundred thousand dollars ($100,000)] shall: 8
1. Annually prepare a financial statement; and 9
2. Once every four (4) years, contract for the application of an attestation 10
engagement as determined by the DLG, as provided in subsection (2) of 11
this section; 12
(b) Every special purpose governmental entity with the higher of annual receipts 13
from all sources or annual expenditures equal to or greater than five hundred 14
thousand dollars ($500,000) [one hundred thousand dollars ($100,000)] but 15
less than one million dollars ($1,000,000) [five hundred thousand dollars 16
($500,000)] shall: 17
1. Annually prepare a financial statement; and 18
2. Once every four (4) years, contract for the provision of an independent 19
audit as provided in subsection (2) of this section; and 20
(c) 1. Every special purpose governmental entity with the higher of annual 21
receipts from all sources or ann ual expenditures equal to or greater than 22
one million dollars ($1,000,000) [five hundred thousand dollars 23
($500,000)] shall, unless qualified for the reporting schedule under 24
subparagraph 2. of this paragraph: 25
a.[1.] Annually prepare a financial statement; and 26
b.[2.] Be audited annually as provided in subsection (2) of this section. 27
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2. a. If a special purpose government entity reporting under this 1
paragraph conducts two (2) consecutive audits that include no 2
opinions other than unqualified opinions, the spec ial purpose 3
governmental entity may choose to comply with the fiscal 4
reporting schedule in paragraph (b) of this subsection. If the 5
special purpose governmental entity subsequently conducts an 6
audit and receives an opinion other than an unqualified opinion 7
from the audit preparer, the special purpose governmental entity 8
shall comply with the provisions of subparagraph 1.a. and b. of 9
this paragraph until the special purpose governmental entity 10
again conducts two (2) consecutive audits with no opinions other 11
than unqualified opinions. 12
b. A special purpose governmental entity subject to this paragraph 13
shall inform the DLG if it has chosen to comply with the fiscal 14
reporting schedule as set out in paragraph (b) of this subsection. 15
The department shall note on th e department's website, and in 16
any reports required under this chapter, the special purpose 17
governmental entities subject to this paragraph and operating 18
under the fiscal reporting schedule as set out in paragraph (b) of 19
this subsection. 20
(2) (a) To provide for the performance of an audit or attestation engagement as 21
provided in subsection (1)(a) to (c) of this section, the governing body of a 22
special purpose governmental entity shall employ an independent certified 23
public accountant or contract with the Aud itor of Public Accounts to conduct 24
the audit or attestation engagement unless the provisions of subsection (3) of 25
this section apply. 26
(b) The audit or attestation engagement shall be completed no later than twelve 27
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(12) months following the close of the fis cal year subject to the audit or the 1
attestation engagement. 2
(c) 1. The special purpose governmental entity shall submit for publication on 3
the registry the audit or attestation engagement, in the form and format 4
required by the DLG. 5
2. A federally regulat ed municipal utility may comply with the 6
requirements of this section for the public power component of its 7
operations by submitting an audit that conforms to the requirements 8
imposed by the federal agency with which it maintains a wholesale 9
power contract. 10
3. A public utility established pursuant to KRS 96.740 that is not a 11
federally regulated municipal utility may comply with the requirements 12
of this section for the public power component of its operations by 13
submitting a copy of its annual audit performed under KRS 96.840. 14
(d) 1. The audit or attestation engagement shall conform to: 15
a. Generally accepted governmental auditing or attestation standards, 16
which means those standards for audits or attestations of 17
governmental organizations, programs, activitie s, and functions 18
issued by the Comptroller General of the United States; 19
b. Generally accepted auditing or attestation standards, which means 20
those standards for all audits or attestations promulgated by the 21
American Institute of Certified Public Accountants; and 22
c. Additional procedures and reporting requirements as may be 23
required by the Auditor of Public Accounts. 24
2. Rather than meeting the standards established by subparagraph 1. of this 25
paragraph, the audit submitted by a federally regulated municipal utility 26
or a public utility established pursuant to KRS 96.740 that is not a 27
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federally regulated municipal utility with regard to the public power 1
component of the utility's operations shall conform to KRS 96.840 and 2
the financial standards of the Federal Energy Regulatory Commission's 3
Uniform System of Accounts. 4
(e) Upon request, the Auditor of Public Accounts may review the final report and 5
all related work papers and documents of the independent certified public 6
accountant relating to the audit or attestation engagement. 7
(f) If a special purpose governmental entity is required by another provision of 8
law to audit its funds more frequently or more stringently than is required by 9
this section, the special purpose governmental entity shall comply with the 10
provisions of that law[,] and shall comply with the requirements of paragraph 11
(c) of this subsection. 12
(g) Notwithstanding any provision of the Kentucky Revised Statutes to the 13
contrary, a unit of government furnishing funds directly to a special purpose 14
governmental entity may require additional audits at the expense of the unit of 15
government furnishing the funds. 16
(h) All audit reports, attestation engagement reports, and financial statements of 17
special purpose governmental entities shall be public records. 18
(3) (a) Any board, commission, or agency established by statute with regulatory 19
authority or oversight responsibilities for a category of special purpose 20
governmental entities may apply to the Auditor of Public Accounts to be 21
approved to provide an alternat ive financial review of the special purpose 22
governmental entities it regulates or oversees that are required by subsection 23
(1)(a) of this section to submit an attestation engagement. The application 24
shall be in the form and format determined by the Auditor of Public Accounts. 25
(b) The Auditor of Public Accounts shall review the application and if the auditor 26
determines tha t the board, commission, or agency has the resources and 27
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capacity to conduct an acceptable alternative financial review, the auditor 1
shall notify the DLG that the board, commission, or agency is approved to 2
provide an alternative financial review of the sp ecial purpose governmental 3
entities it regulates or oversees that are required by subsection (1)(a) of this 4
section to submit an attestation engagement. 5
(c) The Auditor of Public Accounts shall advise the DLG and the board, 6
commission, or agency regarding modifications to the proposed alternative 7
financial review procedures necessary to obtain the Auditor of Public 8
Accounts' approval. 9
(d) Any board, commission, or agency approved to provide alternative financial 10
reviews shall reapply to the Auditor of Publi c Accounts for approval to 11
continue to provide alternative financial reviews at least every four (4) years. 12
The Auditor of Public Accounts may require more frequent approvals. 13
(e) The Auditor of Public Accounts or the DLG may withdraw any approval 14
granted under this subsection if the board, commission, or agency fails to 15
conduct alternative financial reviews using the procedures and including the 16
terms and components agreed to with the DLG. 17
(f) Any board, commission, or agency approved to provide alternativ e financial 18
reviews shall notify the Auditor of Public Accounts and the DLG if an 19
irregularity is found in the alternative financial review. 20
(g) Any special purpose governmental entity subject to regulation or oversight by 21
a board, commission, or agency that obtains approval to provide an alternative 22
financial review under this subsection shall have the option of having an 23
alternative financial review performed by the board, commission, or agency, 24
or may contract for the application of an attestation engage ment as provided 25
in subsection (1)(a) of this section. 26
(4) (a) The Auditor of Public Accounts [DLG] shall determine which procedures 27
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conducted under attestation standards will apply to special purpose 1
governmental entities meeting the conditions established by subsection (1)(a) 2
of this section , and also the standards for an agreed -upon procedures 3
engagement in accordance with Section 2 of this Act. 4
(b) The Auditor of Public Accounts [DLG] may determine that additional 5
procedures be conducted under attestation standards for specific categories of 6
special purpose governmental entities or for specific special purpose 7
governmental entities, as needed, to obtain the oversight and information 8
deemed necessary by the Auditor of Public Accounts[DLG]. 9
(5) Based on the information submitted by special purpose governmental entities under 10
KRS 65A.020 and 65A.090, the DLG shall determine when each special purpose 11
governmental entity was last audited [,] and shall notify the special purpose 12
governmental entity of when each au dit or attestation engagement is due under the 13
new standards and requirements of this section. 14
(6) (a) In determining the requirements relating to audits and financial statements of 15
special purpose governmental entities under subsection (1) of this section , the 16
DLG may exclude annual receipts received by the special purpose 17
governmental entity if: 18
1. The receipts constitute nonrecurring, nonoperating grants for the 19
purpose of capital asset acquisition, capital construction, disaster 20
recovery efforts, or oth er one (1) time purposes as determined by the 21
DLG; and 22
2. The special purpose governmental entity requests, in writing to the DLG 23
and for each fiscal year it receives the revenue in question, that the 24
revenues in question not be included in determining its annual revenues. 25
(b) In determining the requirements relating to audits and financial statements 26
under subsection (1) of this section of special purpose governmental entities 27
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that are public use airports operating under KRS 183.132 to 183.160, the DLG 1
may exclude annual receipts received by those public use airports if the 2
receipts constitute nonoperating or recurring grants for the purpose of capital 3
asset acquisition, capital construction, disaster recovery efforts, or other one 4
(1) time purposes as determined by the DLG. 5
(c) Any receipts excluded under paragraph (a) or (b) of this subsection shall still 6
be reported as required under KRS 65A.020(2)(a)2. 7
(7) The DLG and the Auditor of Public Accounts may promulgate administrative 8
regulations in accordance with[pursuant to] KRS Chapter 13A to implement [the 9
provisions of ]this section. 10
SECTION 2. A NEW SECTION OF KRS CHAPTER 65A IS CREATED TO 11
READ AS FOLLOWS: 12
(1) Effective for fiscal years beginning on or after July 1, 202 7, a special purpose 13
governmental entity required to complete an audit pursuant to Section 1 of this 14
Act may elect, subject to disapproval by the DLG as provided in subsection (3) of 15
this section, to instead have an agreed -upon procedures engagement with e ither 16
the Auditor of Public Accounts or a certified public accountant in accordance 17
with this section. 18
(2) In order for a special purpose governmental entity to proceed with an agreed -19
upon procedures engagement under this section for a particular fiscal ye ar, the 20
following conditions shall be met: 21
(a) The special purpose governmental entity shall have complied with any of 22
the requirements applicable to it under Section 1 of this Act or this section 23
in the immediately preceding fiscal year; 24
(b) The special p urpose governmental entity has not been subject to a special 25
examination by the Auditor of Public Accounts during the immediately 26
preceding fiscal year or during the fiscal year to be reviewed under agreed -27
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upon procedures; 1
(c) For the fiscal year subject t o an agreed -upon procedures engagement, the 2
special purpose governmental entity has received and expended, from all 3
sources and for all purposes, less than fifteen million dollars ($15,000,000); 4
(d) The DLG does not object to the special purpose government al entity's 5
election to use an agreed-upon procedures engagement under subsection (3) 6
of this section; and 7
(e) The special purpose governmental entity is not required by any other 8
provision of state or federal law to perform an audit or examination more 9
stringently than is required by this section. 10
(3) (a) In order to elect to use the alternative procedures provided by this section, a 11
special purpose governmental entity shall complete a written certification 12
sent to the DLG within thirty (30) days following the conclusion of the 13
special purpose governmental entity's fiscal year. 14
(b) The written certification shall affirm that the special purpose governmental 15
entity meets the qualifications of subsection (2)(a) to (e) of this section. 16
(c) Within thirty (30) days following the receipt of the written certification, the 17
DLG may for any reason in its discretion object to the use of the agreed -18
upon procedures engagement by notifying the special purpose governmental 19
entity in writing the details of the objection. 20
(d) A special purpose governmental entity that receives a written objection from 21
the DLG shall be disqualified from using the agreed -upon procedures 22
engagement for that fiscal year. 23
(e) If the DLG does not provide a written objection to the special purpose 24
governmental entity within thirty (30) days, then the special purpose 25
governmental entity may proceed under this section. 26
(4) An agreed -upon procedures engagement entered into by a special purpose 27
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governmental entity under this section shall be conducted and governed under 1
the American Institute of Certified Public Accountants professional standards, 2
and any additional standards and requirements established by the Auditor of 3
Public Accounts through the promulgation of administrative regu lations in 4
accordance with KRS Chapter 13A. At a minimum, any agreed -upon procedures 5
engagement shall be required to examine and report on the following matters of 6
the special purpose governmental entity: 7
(a) Reconciliation of cash, including the recalcula tion of year -end bank 8
reconciliations, confirmation of beginning and ending balances, and 9
verification that reconciled bank balances agree to fund cash balances in 10
the accounting system and financial statement; 11
(b) Confirmation of cash balances directly wi th any external financial 12
institutions; 13
(c) Fund balances and transfers; 14
(d) Inspection of investment holdings for compliance with applicable state law 15
and any policies adopted by the special purpose governmental entity; 16
(e) A statement of receipts and disbursements, including payroll disbursements; 17
(f) Identification of outstanding debt to include confirmation of beginning and 18
ending balances, any new debt issuance or payments, amortization 19
schedules, and compliance with debt terms; and 20
(g) Verification that total expenditures do not exceed appropriations. 21
(5) An agreed -upon procedures engagement performed under this section shall be 22
completed no later than twelve (12) months immediately following the conclusion 23
of the fiscal year being examined. A copy of the agreed-upon procedures report 24
shall be forwarded to the DLG in accordance with subsection (2)(c)1. of Section 1 25
of this Act. 26
(6) Any special purpose governmental entity proceeding under this section to 27
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perform an agreed -upon procedures engagement in li eu of an audit shall enter 1
into a contract with the Auditor of Public Accounts or a certified public 2
accountant. The contract shall set out all terms and conditions of the agreement 3
which shall include but not be limited to requirements that: 4
(a) The Audit or of Public Accounts completes an agreed -upon procedures 5
report in compliance with subsection (4) of this section; and 6
(b) The certified public accountant completing an agreed -upon procedures 7
engagement under this section allows the Auditor of Public Acco unts to 8
review the certified public accountant's work papers upon request. 9
(7) An agreed-upon procedures report completed under this section shall be deemed 10
to satisfy any state law or administrative regulation that requires the submission 11
or completion of an audit. 12
(8) A special purpose governmental entity shall forward a copy of any agreed -upon 13
procedures report completed under this section to the Auditor of Public Accounts 14
upon request from that office. 15
Section 3. KRS 147.635 is amended to read as follows: 16
(1) An area planning commission created under the provisions of KRS 147.610 to 17
147.705 shall, not later than two (2) months prior to the first day of its fiscal year, 18
submit a proposed budget detailing anticipated revenues and expenditures, and a 19
proposed tax rate, to the area council for its approval on or before the first day of 20
each such fiscal year. 21
(2) The area council shall contract with an independent, reputable certified public 22
accountant to perform an audit of the records, books, and accounts of the area 23
planning commission in compliance with Section 1 of this Act [for each fiscal 24
year]. 25
(3) The area planning commission and area council shall comply with the provisions of 26
KRS 65A.010 to 65A.090. 27
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Section 4. KRS 220.280 is amended to read as follows: 1
(1) The powers of the board of directors shall be limited to the construction, 2
maintenance, and operation of such works as are necessary to carry out the purposes 3
of the district in improvement of sanitation, as set forth in KRS 220.030. The board 4
shall not permit house and users' connections at the cost of the district, and every 5
connection shall be made under the supervision of the district. No house or user s' 6
connection shall be made unless and until the house or user is provided with an 7
adequate water supply. 8
(2) In order to effect the proper collection and disposal of sewage and other liquid 9
wastes produced within the district, to promote the public health , comfort, 10
convenience and welfare, and to accomplish all other purposes of the district, the 11
board may clean out, straighten, alter, deepen , or otherwise improve any stream, 12
watercourse, or body of water receiving sewage or other liquid wastes and located 13
in or out of the district; fill up any abandoned or altered stream, watercourse , or 14
body of water located in or out of the district; construct and maintain laterals, trunk 15
sewers, intercepting sewers, siphons, pumping stations, treatment and disposal 16
works, and improvements deemed necessary to accomplish the purposes of the 17
district and construct, preserve, operate , or maintain such works in or out of the 18
district; construct connections to the works of the district for the delivery thereto of 19
sewage and ot her liquid wastes; incorporate with the works of the district or 20
otherwise utilize any public sewers, drains , or other sewerage improvements either 21
without modifications or with repairs, modifications , or changes deemed necessary; 22
construct any and all of the works and improvements across or through any public 23
or private property in or out of the district; hold, encumber, control, acquire by 24
donation, purchase, or condemnation, and construct, own, lease, use and sell, any 25
real or personal property, or any e asement necessary for rights -of-way or locations 26
for the works and improvements of the district, or for any necessary purpose, or for 27
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obtaining or storing material to be used in constructing and maintaining the works 1
and improvements. 2
(3) KRS 220.010 to 22 0.540 shall not limit or interfere with the right of public 3
corporations to install, maintain , and operate sewerage systems as otherwise 4
permitted by law, but the board of directors shall have full power and authority in 5
the construction and maintenance of improvements for the purposes of the district 6
to serve the area included within the district, and the board of directors may require 7
the use of the improvements of the district by persons and public corporations 8
included within the district and for which the improvements were installed. 9
(4) The board of directors shall have an [annual ] audit made by a certified public 10
accountant in compliance with Section 1 of this Act , copies of which shall be filed 11
with the Secretary of State and with the county judge/ex ecutive of the county or 12
counties in which the sanitation district is located. 13
Section 5. KRS 43.070 is amended to read as follows: 14
(1) (a) To determine whether any unauthorized, illegal, irregular, or unsafe handling 15
or expenditure of revenue or other improper practice of financial 16
administration has occurred and to assure that all proper items have been duly 17
charged, taxed, and reported, the Auditor shall audit annually: 18
1. The funds contained in each county's budget;[ and] 19
2. The books, accounts, and papers of all county clerks and sheriffs , which 20
includes receipts paid to county clerks from the collection of: 21
a. Motor vehicle and motorboat registration fees, motor vehicle a nd 22
motorboat licenses, and other receipts due the clerk pertaining to 23
motor vehicles and motorboats as provided in KRS Chapters 186, 24
186A, and 235; 25
b. The motor vehicle usage tax as provided in KRS 138.460; and 26
c. The ad valorem tax on motor vehicles and m otorboats as 27
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provided in KRS 134.800; 1
County clerks shall transmit a copy of the portion of the audit relating to the 2
receipts set out in subparagraph 2.a. to c. of this paragraph to the 3
Department of Revenue and the Kentucky Transportation Cabinet. 4
(b) The Auditor shall not conduct an audit pursuant to this subsection if the fiscal 5
court or the elected official notifies the Auditor that a certified public 6
accountant has been employed to audit the books, accounts, and papers of the 7
county or the fee office, in accordance with KRS 64.810. 8
(c) 1. If any county clerk or sheriff meets the criteria established in this 9
subsection and any additional criteria established in administrative 10
regulations promulgated by the Auditor, that county clerk's or sheriff's 11
audit required by this section may, in the discretion of the Auditor, be 12
conducted by an agreed -upon procedures engagement performed by the 13
Auditor. If, in the discretion of the Auditor, an agreed -upon procedures 14
engagement in progress will not provide suffici ent oversight of the 15
county clerk's or sheriff's office, the Auditor may at any time convert the 16
engagement to an audit performed under paragraph (a)2. of this 17
subsection. A county clerk or sheriff shall not be eligible for the agreed -18
upon procedures engag ement as allowed in this paragraph for the first 19
audit period after election if the county clerk or sheriff is serving in 20
office for the first time, or is assuming the office after experiencing a 21
break in sequential service in that position. 22
2. The Auditor and the county clerk or sheriff shall establish specific 23
procedures for any agreed -upon procedures engagement. If the Auditor 24
and the county clerk or sheriff cannot agree to the specific procedures 25
for an agreed -upon procedures engagement, the audit of th e county 26
clerk's or sheriff's office shall be conducted under paragraph (a)2. of this 27
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subsection for that year subject to the audit. 1
3. At a minimum, the county clerk or sheriff shall meet the following 2
criteria in order to be eligible to have the county c lerk's or sheriff's 3
annual audit in any particular year conducted using agreed -upon 4
procedures: 5
a. The county clerk or sheriff applies to the Auditor to have an 6
agreed-upon procedures engagement for the year subject to the 7
audit on a form provided by the A uditor and by the application 8
deadline established by the Auditor; 9
b. The county clerk's or sheriff's office did not have any reported 10
audit comment or finding in its most recent audit report; 11
c. The county clerk or sheriff and the Auditor agree to specifi c 12
procedures for the agreed-upon procedures engagement; and 13
d. Any additional criteria that may be determined by the Auditor. 14
4. The publication requirements related to an agreed -upon procedures 15
engagement shall be the same as those required for audits of the county 16
clerks and sheriffs performed under paragraph (a)2. of this subsection, 17
except that the Auditor may provide a summary of the agreed -upon 18
procedures engagement report, and publication of the summary shall 19
satisfy the statutory requirements to pub lish the audit report, opinion 20
letter, and transmittal letter. 21
5. The billing and expense provisions of subsection (3) of this section shall 22
apply to any agreed -upon procedures engagement performed under this 23
section. 24
6. The Auditor may promulgate administ rative regulations that set forth 25
additional criteria to qualify for agreed -upon procedures engagements, 26
the application procedures, and the standards, procedures, guidelines, 27
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and reporting requirements for agreed -upon procedures engagements 1
under this section. 2
7. In exercising discretion regarding whether a county clerk or sheriff who 3
otherwise meets the minimum requirements may have an agreed -upon 4
procedures engagement in lieu of an audit for any particular year subject 5
to an engagement, and in exercising discretion regarding the proposed 6
procedures for the agreed -upon procedures engagement for any 7
particular year subject to an audit, the Auditor may consider factors 8
including but not limited to past audit comments or agreed -upon 9
procedures engagement find ings, assessment of risks, complaints, 10
financial statements, the number of consecutive agreed -upon procedures 11
engagements performed of the county clerk or sheriff, and other factors 12
relevant to oversight of the county clerk's or sheriff's office. 13
(2) The Auditor may audit: 14
(a) The books, accounts and papers of all county judges/executive, county 15
attorneys, coroners and constables; and 16
(b) The books, accounts, papers, and performance of all special purpose 17
governmental entities as defined in KRS 65A.010. The expense of any audit 18
or examination performed pursuant to this paragraph shall be borne by the 19
entity audited or examined. 20
(3) (a) The county shall bear one -half (1/2) of the actual expense of the audit 21
conducted pursuant to subsection (1)(a)1. of this se ction and shall bear the 22
total actual expense of the audit conducted pursuant to subsections (1)(a)2. 23
and (2)(a) of this section. No county shall be required to bear the expense for 24
more than one (1) audit of the same fund or office annually pursuant to 25
subsection (1)(a)1. or 2. of this section, except as provided in KRS 64.810(4). 26
(b) The Kentucky Transportation Cabinet shall bear the cost of the portion of 27
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the audit of receipts from motor vehicles and motorboats required in 1
subsection (1)(a)2. of this sec tion, regardless of whether the Auditor 2
prepared the audit required under this section or the county made other 3
arrangements for the audit under subsection (1)(b) of this section and KRS 4
64.810. 5
(4) Within a reasonable time after the completion and distrib ution of the audit reports 6
authorized by subsection (1) of this section, the Auditor of Public Accounts shall 7
bill the county for the expenses incurred pursuant to subsection (3) of this section. 8
A copy of this bill shall be forwarded to the secretary of t he Finance and 9
Administration Cabinet. Should the fiscal court within sixty (60) days following 10
receipt of said bill determine the charge to be excessive or otherwise improper it 11
shall submit its objection to the secretary of the Finance and Administration Cabinet 12
and to the State Treasurer for resolution of the controversy in accordance with 13
subsection (5) of this section. If the amount billed has not been paid within sixty 14
(60) days from date of billing, and no objection has been filed, the Auditor shall 15
notify the secretary of the Finance and Administration Cabinet and the secretary of 16
revenue who shall cause said amount to be deducted from the next payment or 17
return of moneys provided by KRS 47.110 by the state to the county or counties. 18
Deductions shall continue until the total amount due the Auditor's office has been 19
paid. All moneys received pursuant to this section shall be credited to the trust and 20
agency account of the Auditor of Public Accounts. When an objection to the bill 21
has been filed with the secretary of the Finance and Administration Cabinet and the 22
State Treasurer in accordance with subsection (5) of this section the amount found 23
to be equitable and just shall become payable immediately upon the entry of the 24
final decision. 25
(5) Any controversy over the amount of the bill for the actual expenses incurred shall 26
be submitted by the fiscal court to the secretary of the Finance and Administration 27
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Cabinet and the State Treasurer for a decision as to the proper amount. In the event 1
that these two (2) arbitrators fail to agree, then the controversy shall be submitted to 2
the Attorney General, whose decision shall be final. 3
Section 6. KRS 186.240 is amended to read as follows: 4
(1) It shall be the duty of the cabinet to carry out the provisions of KRS 186.005 to 5
186.260, and: 6
(a) Provide to the clerk in each county access to all forms provided for in KRS 7
186.005 to 186.260; 8
(b) Keep a numerical record of all registration numbers issued in the state and 9
also keep a record of motor or vehicle identification numbers required by 10
KRS 186.160; 11
(c) Furnish to each clerk, originally each year upon estimate, and thereafter upon 12
requisition at all times, a sufficient supply of standard, noncommercial plates 13
and the supplies necessary to provide evidence of registration for all classes of 14
vehicles required to be registered; and 15
(d) Prescribe a standard plate of practical form and size for police identification 16
purposes that shall contain: 17
1. The registration identifier; 18
2. An indication that Kentucky is the issuing jurisdiction; 19
3. At the discretion of the cabinet, any combination of the following 20
phrases: 21
a. "Bluegrass State"; or 22
b. "United We Stand, Divided We Fall"; 23
4. For standard plates for noncommercial vehicles: 24
a. The county in which the plate is issued; and 25
b. At the discretion of the person to whom the vehicle is registered, 26
the phrase "In God We Trust"; and 27
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5. For plates for commercial vehicles, the year the license expires and 1
words or information the Departme nt of Vehicle Regulation may 2
prescribe by administrative regulation in accordance with[, pursuant to] 3
KRS Chapter 13A. 4
(2) Except as provided in KRS 186A.127, license plates issued pursuant to this chapter 5
shall conform to the provisions of subsection (1)( c) and (d) of this section. The 6
Transportation Cabinet shall provide for the issuance of reflectorized plates for all 7
motor vehicles, and shall collect a fee, in addition to the fee set out in KRS Chapter 8
186 and KRS 281.631, of fifty cents ($0.50). The fi fty cents ($0.50) fee to 9
reflectorize license plates shall be used by the cabinet as provided in subsection (3) 10
of this section. 11
(3) The reflectorized license plate program fund is established in the state road fund 12
and appropriated on a continual basis to the cabinet to administer the moneys as 13
provided in this subsection. The fifty cents ($0.50) fee collected by the cabinet to 14
reflectorize license plates shall be deposited into the program fund and used to issue 15
reflectorized license plates. If at the end of a fiscal year, money remains in the 16
program fund, it shall be retained in the fund and shall not revert to the state road 17
fund. The interest and income earned on money in the program fund shall also be 18
retained in the program fund to carry out the prov isions of this subsection. The 19
Transportation Cabinet shall issue reflectorized license plates under the provisions 20
of this subsection on a schedule to be determined at the discretion of the cabinet. 21
(4) Except as directed under subsection (3) of this sect ion, the Transportation Cabinet 22
shall receive all moneys forwarded by the clerk in each county and turn it over to 23
the State Treasurer for the benefit of the state road fund. 24
(5) The Transportation Cabinet shall require an accounting by the clerk in each c ounty 25
for any moneys received by him or her under the provisions of this chapter, after the 26
deduction of his or her fees under this chapter, and for all receipts, forms, plates, 27
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and insignia consigned to him or her. The Auditor of Public Accounts, pursuant to 1
Section 5 of this Act [KRS 43.071] , or a certified public accountant acting on 2
behalf of the county pursuant to subsection (1)(b) of Section 5 of this Act, shall 3
annually audit each county clerk concerning his or her responsibilities for the 4
collection of various fees and taxes associated with motor vehicles. The secretary of 5
the Transportation Cabinet, with the advice, consultation, and approval of the 6
Auditor, shall develop and implement an inventory and accounting system which 7
shall insure that the audits mandated in Section 5 of this Act [KRS 43.071] are 8
performed in accordance with generally accepted auditing standards. The 9
Transportation Cabinet shall pay for the portion of the audit mandated by 10
subsection (1)(a)2. of Section 5 of this Act[ audits mandated by KRS 43.071]. 11
(6) When applied for under KRS 186.060 or 186.061, motor or vehicle numbers 12
assigned shall be distinctive to show that they were designated by the cabinet. 13
Section 7. KRS 64.830 is amended to read as follows: 14
(1) An outgoing county official, as soon as his or her successor has been qualified and 15
inducted into office and his or her official bond approved, shall immediately vacate 16
his or her office, deliver to his or her successor all books, papers, records , and 17
other property held by virt ue of his or her office, and make a complete settlement 18
of his or her accounts as county official, except as otherwise provided in this 19
section. 20
(2) (a) Each outgoing county official shall make a final settlement with the fiscal 21
court of his or her county within sixty (60) days [ by March 15] immediately 22
following the expiration of his or her term of office, or the date a vacancy is 23
otherwise created, for all money received by him or her as county official and 24
to obtain his or her quietus, and immediately thereafter he or she shall deliver 25
these records to the incumbent county official. 26
(b) If an official's vacancy does not coincide with the end of the calendar year 27
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or end of the official's term, the outgoing county official shall remit any 1
remaining funds to the fiscal court as excess fees as determined by the final 2
settlement pursuant to paragraph (a) of this subsection. The fiscal court 3
shall, as soon as practicable, provide an amount equal to the excess fees 4
remitted by the outgoing official to the outgoin g county official's successor 5
for official use. 6
(3) The outgoing county official and his or her bondsmen or sureties shall be relieved 7
in securing his or her quietus and in the final settlement of his or her accounts of 8
all responsibility for collecting and accounting for the amounts covered by the 9
receipt and the incoming county official shall be charged with full responsibility for 10
collecting and accounting for these amounts as otherwise provided by law for the 11
collection and accounting of taxes. 12
(4) The outgoing county official shall be allowed and paid by the fiscal court the 13
reasonable expenses actually incurred in preparing the receipt required under this 14
section. Reasonable expenses actually incurred ma y include his or her office 15
expenses and salary, and salaries of deputies and employees paid in accordance 16
with the schedule of the previous year or the amount paid an auditor necessary in 17
determining and verifying the final settlement to the fiscal court. 18
Section 8. KRS 65A.010 is amended to read as follows: 19
As used in this chapter: 20
(1) "County" means any county, consolidated local government, urban -county 21
government, unified local government, or charter county; 22
(2) "DLG" means the Department for Local Government established by KRS 23
147A.002; 24
(3) "Establishing entity" means the city or county, or any combination of cities and 25
counties, that established a special purpose governmental entity and that has not 26
subsequently withdrawn its affiliation with the special purpose governmental entity 27
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by ordinance or other official action; 1
(4) "Federally regulated municipal utility" means a municipal utility governed by the 2
provisions of KRS 96.550 to 96.901, that maintains a wholesale power contract 3
with a federal agency that also serves as its regulatory authority; 4
(5) [(a) ]"Fee": 5
(a) Means any user charge, levy, assessment, fee, schedule of rates, or tax, other 6
than an ad valorem tax, imposed by a special purpose governmental entity ; 7
and[.] 8
(b) Does["Fee" shall] not include the following charges imposed by special 9
purpose governmental entities that provide utility services: 10
1. Any fuel cost adjustment that is: 11
a. Made pursuant to an agreement with a power supplier; 12
b. Amended by the power supplier based on the variable cost of fuel; 13
and 14
c. Passed through to the consumer by the utility p ursuant to the 15
agreement between the utility and the power supplier; 16
2. Any power or energy cost adjustment implemented pursuant to a duly 17
adopted base rate that provides for the periodic adjustment of a 18
component of the rate, including any fuel costs or t ransmission costs, in 19
accordance with the formula or conditions set forth in the base rate; or 20
3. Any environmental control cost adjustments or surcharges implemented 21
pursuant to a duly adopted base rate that provides for the periodic 22
adjustment of a compo nent of the rate in accordance with a formula or 23
conditions set forth in the base rate; 24
(6) [(a) ]"Private entity": 25
(a) Means any entity whose sole source of public funds is from payments 26
pursuant to a contract with a city, county, or special purpose gover nmental 27
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entity, including funds received as a grant or as a result of a competitively bid 1
procurement process; and[.] 2
(b) ["Private entity" ]Does not include any entity: 3
1. Created, wholly or in part, by a city, county, or combination of cities 4
and counties to perform one (1) or more of the types of public services 5
listed in subsection (9)(c) of this section; or 6
2. Governed by a board, council, commission, committee, authority, or 7
corporation with any member or members who are appointed by the 8
chief executive or governing body of a city, county, or combination of 9
cities and counties, or whose voting membership includes governmental 10
officials who serve in an ex officio capacity; 11
(7) "Public funds" means any funds derived from the levy of a tax, fee, assessmen t, or 12
charge, or the issuance of bonds by the state or a city, county, or special purpose 13
governmental entity; 14
(8) "Registry" means the online central registry and reporting portal established 15
pursuant to KRS 65A.020; and 16
(9) (a) "Special purpose governmen tal entity" or "entity" means any agency, 17
authority, or entity created or authorized by statute which: 18
1. Exercises less than statewide jurisdiction; 19
2. Exists for the purpose of providing one (1) or a limited number of 20
services or functions; 21
3. Is governed by a board, council, commission, committee, authority, or 22
corporation with policy -making authority that is separate from the state 23
and the governing bo dy of the city, county, or cities and counties in 24
which it operates; and 25
4. a. Has the independent authority to generate public funds; or 26
b. May receive and expend public funds, grants, awards, or 27
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appropriations from the state, from any agency, or authorit y of the 1
state, from a city or county, or from any other special purpose 2
governmental entity. 3
(b) "Special purpose governmental entity" includes[shall include] entities 4
meeting the requirements established by paragraph (a) of this subsection, 5
whether the e ntity is formed as a nonprofit corporation under KRS Chapter 6
273, pursuant to an interlocal cooperation agreement under KRS 65.210 to 7
65.300, or pursuant to any other provision of the Kentucky Revised Statutes. 8
(c) Examples of the types of public services that may be provided by special 9
purpose governmental entities include but are not limited to the following: 10
1. Ambulance, emergency, and fire protection services; 11
2. Flood control, drainage, levee, water, and water conservation services, 12
and services provi ded by watershed conservancy districts and soil and 13
water conservation districts; 14
3. Area planning, management, community improvement, and community 15
development services; 16
4. Library services; 17
5. Public health, public mental health, and public hospital services; 18
6. Riverport and airport services; 19
7. Sanitation, sewer, waste management, and solid waste services; 20
8. Industrial and economic development; 21
9. Parks and recreation services; 22
10. Construction, maintenance, or operation of roads and bridges; 23
11. Mass transit services; 24
12. Pollution control; 25
13. Construction or provision of public housing, except as set out in 26
paragraph (d)8. of this subsection; 27
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14. Tourism and convention services; and 1
15. Agricultural extension services. 2
(d) "Special purpose governmental entity" does[shall] not include: 3
1. Cities; 4
2. Counties; 5
3. School districts; 6
4. Private entities; 7
5. Chambers of commerce; 8
6. Any incorporated entity that: 9
a. Provides utility services; 10
b. Is member-owned; and 11
c. Has a governing body whose voting members are all elected by the 12
membership of the entity; 13
7. Any entity whose budget, finances, and financial information are fully 14
integrated with and included as a part of the budget, finances, and 15
financial reporting of the city, county, or cities and counties in which it 16
operates; 17
8. Federally regulated public housing authorities established pursuant to 18
KRS Chapter 80 that receive no more than twenty percent (20%) of their 19
total funding for any fiscal year from nonfedera l fees, not including 20
rental income;[ or] 21
9. a. Any fire protection district or volunteer fire department district 22
operating under KRS Chapter 75 with the higher of annual receipts 23
from all sources or annual expenditures of less than one hundred 24
thousand dollars ($100,000); or 25
b. Any fire department incorporated under KRS Chapter 273; or 26
10. A local industrial development authority established under KRS 27
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154.50-301 to 154.50 -346 if the funds of the authority are audited as 1
part of the budget of the applicabl e establishing entity establishing the 2
authority. 3
Section 9. KRS 64.012 is amended to read as follows: 4
(1) The county clerk shall receive for the following services the following fees: 5
(a) 1. Recording and indexing of a: 6
a. Deed of trust or assignment for the benefit of creditors; 7
b. Deed; 8
c. Deed of assignment; 9
d. File-stamped copy of documents set forth in KRS 14A.2 -040(1) or 10
(2) that have been filed first with the Secretary of State; 11
e. Real estate option; 12
f. Power of attorney; 13
g. Revocation of power of attorney; 14
h. Lease which is recordable by law; 15
i. Deed of release of a mortgage or lien under KRS 382.360; 16
j. United States lien; 17
k. Release of a United States lien; 18
l. Release of any recorded encumbrance other than state liens; 19
m. Lis pendens notice concerning proceedings in bankruptcy; 20
n. Lis pendens notice; 21
o. Mechanic's and artisan's lien under KRS Chapter 376; 22
p. Assumed name; 23
q. Notice of lien issued by the Internal Revenue Service; 24
r. Notice of lien discharge issued by the Internal Revenue Service; 25
s. Original, assignment, amendment, or continuation financing 26
statement; 27
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t. Making a record for the establishment of a city, recording the plan 1
or plat thereof, and all other service incident; 2
u. Survey of a city, or any part thereof, or any addition to or 3
extensions of the boundary of a city; 4
v. Recording with statutory authority for which no specific fee is set, 5
except a military discharge; 6
w. Will or other probate docum ent pursuant to KRS Chapter 392 or 7
394; 8
x. Court ordered name change pursuant to KRS Chapter 401; 9
y. Land use restriction according to KRS 100.3681; and 10
z. Filing with statutory authority for which no specific fee is set. 11
For all items in this subsection if the entire thereof does not exceed 12
five (5) pages .........................................................................$33.00 13
And, for all items in this subsection exceeding five (5) pages, 14
for each additional page ..........................................................$3.00 15
And, for all items in this subsection for each additional reference 16
relating to same instrument .....................................................$4.00 17
2. The thirty -three dollar ($33) fee imposed by this subsection shall be 18
divided as follows: 19
a. Twenty-seven dollars ($27) shall be retained by the county clerk; 20
and 21
b. Six dollars ($6) shall be paid to the affordable housing trust fund 22
established in KRS 198A.710 and shall be remitted by the county 23
clerk within ten (10) days following the end of the quarter in 24
which the fee was received. Each remittance to the affordable 25
housing trust fund shall be accompanied by a summary report on a 26
form prescribed by the Kentucky Housing Corporation. 27
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(b) For noting a security interest on a certificate of title pursuant to 1
KRS Chapter 186A ..................................................................................$12.00 2
(c) For filing the release of collateral under a financing statement 3
and noting same upon the face of the title pursuant to KRS Chapter 4
186 or 186A ...............................................................................................$5.00 5
(d) Filing or recording state tax or other state liens ........................................$5.00 6
(e) Filing release of a state tax or other state lien ...........................................$5.00 7
(f) Acknowledging or notarizing any deed, mortgage, power of attorney, 8
or other written instrument required by law for recording and certifying 9
same ..................................... ......................................................................$5.00 10
(g) Recording plats, maps, and surveys, not exceeding 24 inches by 11
36 inches, per page ..................................................................................$40.00 12
(h) Recording a bond, for each bond .............................................................$10.00 13
(i) Each bond required to be taken or prepared by the clerk ..........................$4.00 14
(j) Copy of any bond when ordered ................................................................$3.00 15
(k) Administering an oath and certificate thereof ...........................................$5.00 16
(l) Issuing a license for which no other fee is fixed by law ............................$8.00 17
(m) Issuing a solicitor's license ......................................................................$15.00 18
(n) Marriage license, indexing, recording, and issuing certificate thereof ....$26.50 19
(o) Every order concerning the establishment, changing, closing, or 20
discontinuing of roads, to be paid out of the county levy when 21
the road is established, changed, closed, or discontinued, and by 22
the applicant when it is not ...............................................................$3.00 23
(p) Registration of licenses for professional persons required to register 24
with the county clerk ......................................................................$10.00 25
(q) Certified copy of any record ......................................................................$5.00 26
Plus fifty cents ($.50) per page after three (3) pages 27
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(r) Filing certification required by KRS 65.070(2)(a) ....................................$5.00 1
(s) Filing notification and declaration and petition of candidates 2
for Commonwealth's attorney ........................................................$200.00 3
(t) Filing notification and declaration and petition of candidates for county 4
and independent boards of education .............................................$20.00 5
(u) Filing notification and declaration and petition of candidates for 6
boards of soil and water conservation districts ...............................$20.00 7
(v) Filing notification and declaration and petition of candidates for 8
other office ......................................................................................$50.00 9
(w) Filing declaration of intent to be a write-in candidate for office ..............$50.00 10
(x) Filing petitions for elections, other than nominating petitions ................$50.00 11
(y) Notarizing any signature, per signature .....................................................$2.00 12
(z) Filing bond for receiving bodies under KRS 311.310 .............................$10.00 13
(aa) Noting the assignment of a certificate of delinquency and recording 14
and indexing the encumbrance under KRS 134.126 or 134.127 .............$27.00 15
(ab) Filing a going-out-of-business permit under KRS 365.445 .....................$50.00 16
(ac) Filing a renewal of a going-out-of-business permit under KRS 365.445 $50.00 17
(ad) Filing and processing a transient merchant permit under KRS 365.680 .$25.00 18
(ae) Recording and indexing a real estate mortgage: 19
1. For a mortgage that does not exceed thirty (30) pages ....................$63.00 20
2. And, for a mortgage that exceeds thirty (30) pages, for each additional 21
page .........................................................................................$3.00 22
(af) Filing or recording a lien or release of lien by a consolidated local 23
government, urban -county government, unified local government, or city of 24
any class ................................................................................................$20.00 25
(2) The sixty-three dollar ($63) fee imposed by subsection (1)(ae) of this section shall 26
be divided as follows: 27
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(a) Fifty-seven dollars ($57) shall be retained by the county clerk; and 1
(b) Six dollars ($6) shal l be paid to the affordable housing trust fund established 2
in KRS 198A.710 and shall be remitted by the county clerk within ten (10) 3
days following the end of the quarter in which the fee was received. Each 4
remittance to the affordable housing trust fund s hall be accompanied by a 5
summary report on a form prescribed by the Kentucky Housing Corporation. 6
(3) (a) For services related to the permanent storage of records listed in paragraphs 7
(a), (g), (n), and (ae) of subsection (1) of this section, the clerk sha ll be 8
entitled to receive a reimbursement of ten dollars ($10). 9
(b) In counties or a county containing an urban -county government, charter 10
county government, or unified local government: 11
1. This fee shall: 12
a. Not be paid annually to the fiscal court under KRS 64.152; 13
b. Not be paid to the Finance and Administration Cabinet under KRS 14
64.345; 15
c. Be accumulated and transferred to the fiscal court or the legislative 16
body of an urban -county government on a monthly b asis within 17
ten (10) days following the end of the month; 18
d. Be maintained by the fiscal court or the legislative body of an 19
urban-county government in a separate bank account and 20
accounted for in a separate fund; and 21
e. Not lapse to the general fund of th e county or urban -county 22
government. 23
2. The moneys accumulated from this fee shall be held in perpetuity by the 24
fiscal court or the legislative body of an urban -county government for 25
the county clerk's exclusive use for: 26
a. Equipment related to the permane nt storage of and access to 27
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records, including deed books, binders, shelves, microfilm 1
equipment, and fireproof equipment; 2
b. Hardware for the permanent storage of and access to records, 3
including computers, servers, and scanners; 4
c. Software for the perma nent storage of and access to records, 5
including vendor services and consumer subscription fees; 6
d. Personnel costs for the permanent storage of and access to records, 7
including overtime costs for personnel involved in the digitization 8
of records; and 9
e. Cloud storage and cybersecurity services for the permanent storage 10
of and access to records. 11
3. Notwithstanding KRS 68.275, claims by a county clerk that are for the 12
approved expenditures in subparagraph 2. of this paragraph shall be paid 13
by the county judge/executive or the chief executive officer of an urban -14
county government by a warrant drawn on the fund and co-signed by the 15
treasurer of the county or urban-county government. 16
4. No later than August[July] 1 of each year, each county fiscal court or 17
legislative body of an urban -county government shall submit a report to 18
the Legislative Research Commission detailing the receipts, 19
expenditures, and any amounts remaining in the fund. 20
(c) In a county containing a consolidated local government: 21
1. The fee shall not: 22
a. Be paid to the Finance and Administration Cabinet under KRS 23
64.345; or 24
b. Lapse to the general fund of the consolidated local government. 25
2. The moneys accumulated from this fee shall be held in perpetuity by the 26
county clerk in a separate fund to be used exclusively for: 27
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a. Equipment related to the permanent storage of and access to 1
records, including deed books, binders, shelves, microfilm 2
equipment, and fireproof equipment; 3
b. Hardware for the permanent storage of and access to records, 4
including computers, servers, and scanners; 5
c. Software for the permanent storage of and access to records, 6
including vendor services and consumer subscription fees; 7
d. Personnel costs for the permanent storage of and access to records, 8
including overtime costs fo r personnel involved in the digitization 9
of records; and 10
e. Cloud storage and cybersecurity services for the permanent storage 11
of and access to records. 12
3. No later than August[July] 1 of each year, the county clerk shall submit 13
a report to the consolidate d local government and the Legislative 14
Research Commission detailing the receipts, expenditures, and any 15
amounts remaining in the fund. 16
Section 10. The following KRS section is repealed: 17
43.071 Annual audit of county clerk's motor vehicle and motorboat tax receipts. 18
Section 11. Sections 1, 2, 3, 4 and 8 of this Act take effect July 1, 2027. 19