Ervin Klein v. Lori Hudson Flanery

Summary

The Kentucky Supreme Court affirmed judgments upholding transfers of surplus regulatory-agency funds to the General Fund. It held that incidental fiscal-period surpluses do not convert regulatory fees into unconstitutional taxes when the fees remain reasonably related to regulatory expenses, and that the funds were public rather than private because they served public regulatory purposes. The court also held that the governing budget statutes authorized the transfers and declined to review a separate fee-rate challenge that had not been adjudicated below. Justice Venters, joined by Justice Scott, dissented, arguing that ongoing regulatory fees cannot be surplus and that the diversions violated the Kentucky Constitution.