TheTimesTribune.com, Corbin, KY

February 11, 2014

W’burg in lawsuit against Dept. of Insurance


The Times-Tribune

CORBIN — By John L. Ross / Staff Writer

The city of Williamsburg is one of many that wants its money back.

And after Monday’s regular meeting of the Williamsburg City Council, the city will now be added to a growing list of cities named in a lawsuit against the Kentucky Department of Insurance seeking $8 million loaned four years ago.

According to Mayor Roddy Harrison, the Kentucky League of Cities Insurance Services Association worker’s compensation fund loaned the money to the Kentucky School Boards Insurance Trust (KSBIT).

Harrison said KSBIT was having trouble paying claims and adjustments — and after approaching the League of Cities a second time, those board members reviewed it.

The mayor said the Department of Insurance got involved in the situation, and the end result was the $8 million loan — $5.5 million for the workers’ compensation fund, and $2.5 million for its property and liability fund.

A contract was entered, Harrison said, that if KSBIT was unable to generate repayment, KSBIT would be required to assess its members to repay the loans.

“It’s been a little bit of a fight,” Harrison said, adding that the involved parties have gone into mediation. “(And now) we’re taking it to court.”

Harrison asked council members to approve the resolution to allow the mayor to join the lawsuit on behalf of the city.

“The money was loaned — it was not a gift,” Harrison said. “That’s the bottom line.”

However, when the time came for council members to vote — three of the five who were present elected to abstain from the vote.

All three council members — Laurel West, Patty Faulkner and Erica Harris — cited direct or indirect ties to local school boards.

Council member Richard Foley motioned to approve the resolution, with a second from Council member Mary Ann Stanfill.

Harrison also voted for the resolution. After the meeting, Harrison consulted an attorney, who said the measure did pass on the majority vote.

In other business:

— Council members listened and approved the second reading of changes to an ordinance regarding the city’s restaurant tax.

“This does NOT increase the tax,” Harrison said — twice — during the January board meeting.

What was changed was making amendments and deletions altered in 1998 and 2004 part of one solid ordinance, which includes changes made this year.

Harrison explained that in 1989 when the restaurant tax ordinance was first passed, the tax rate was two percent.

That was increased in 1998 to three percent — which is reflected in section 1 of the city ordinance.

In the second section, Harrison explained that additions were made as to what defines a restaurant, which now includes (but is not limited to) restaurants, coffee shops, bakeries, cafeterias, short order cafes, luncheonettes, concession stands, in addition to what was already listed

Other establishments listed originally include grills, tearooms, sandwich shops, soda fountains, taverns, bars, cocktail lounges, nightclubs, roadside stands, street vendors, catering, commissaries, or similar places where food is prepared and sold for consumption.

Added to that was the exclusion of school-operated cafeterias, churches, non-profit organizations, Old Fashioned Trading Days and other non-profit community events. However, school cafeterias operated by an independent corporation are taxable.

Section 3 of the ordinance was eliminated due to redundancy, Harrison said.

Section 5 concerns penalties for unpaid taxes. The first part of it states that taxes not paid by the due date are subject to a 10-percent penalty, combined with a six-percent interest against the total amount due at any time. After 60 days, the ordinance states the penalty amount will be compounded monthly. The remainder of this section has been added this year.

“Penalty or interest not paid shall have the same 10-percent penalty, together with interest at the rate of 6 percent against the total amount of the penalty and interest,” the new section of the ordinance states. “Violator shall pay all cost(s) including attorney fees, court fees and other expenses involved in the collection of (the) past due amount.

That section of the ordinance now also includes that anyone paying by credit card, check or bank draft and those payments are not honored, that person will be charged a $50 fee in addition to other penalties, fees or interest. If that payment is not honored, it will be deemed as never having been received, further adding to penalties and interest payments due.

The only other change was eliminating Section 10 of the ordinance concerning a collection fee collected by the city.

The ordinance, including changes, deletions and additions, contains 19 sections total.