TheTimesTribune.com, Corbin, KY

Local News

August 23, 2012

Special taxing districts in spotlight’s glare

CORBIN — By RONNIE ELLIS / CNHI News Service

A review of hundreds of special taxing districts indicates they handle $1.5 billion of tax money with little or no public oversight and some lawmakers want to give fiscal courts the power to veto or approve the districts’ tax rates.

Special taxing districts have been set up over the years to fund with dedicated taxes or fees such things as water and sewer districts, libraries and fire departments. But no one knows just how many of them there are and there is no way for elected officials to review how they spend the funds they collect.

Auditor of Public Accounts Adam Edelen is trying to pin down the number of such districts and determine how much each spends and how many are providing accurate accounts of how they spend that money.

Edelen told the Committee on Local Government Wednesday that a “Byzantine” system of laws and reports governing the special taxing districts has grown up over the years and he wants to establish a central website where taxpayers can identify them by county and see how they are spending tax dollars.

When he began the review, Edelen estimated there are between 1,000 and 1,800 such districts spending up to $1 billion. Wednesday he said the lower end of the estimated number is likely to be accurate but the estimate of spending was too low.

“I can tell you we’re going to be north of that estimate,” Edelen said. He said they collect taxes or fees in excess of $1.5 billion.

He said thus far about 900 such districts have responded to his requests for information and his office has conducted 15 town hall meetings around the state to explain the review of the districts. In most cases, he said, taxing district representatives may start out defensive about their role but are supportive of the review after they lern how confusing the system is.

Edelen was clear that he intends to gather information from all the districts.

“I have the power of subpoena and I intend to use it,” Edelen said. “We are not going to be ignored.”

Edelen said “the vast majority” of the taxing districts are doing business “the right way.” But he wants to recommend changes to the legislature for ensuring “transparency” before the 2013 General Assembly. He said his role is to be the “public taxpayer watchdog” and his recommendations won’t address the governance of those districts.

But committee Co-Chair Sen. Damon Thayer, D-Georgetown, said he wants elected officials to approve any tax increases by the districts.

Thayer said lawmakers are accountable to voters for the state’s $9 billion general fund budget and he doesn’t understand why someone shouldn’t have to answer to voters for the $1.5 billion spent by taxing districts.

 “I am going to file a bill on special districts in 2013,” Thayer said. “Anytime a special district proposes to raise a tax or a fee, it must go to the elected body that has the authority to support that district.”

In most cases, that would be the fiscal court in each county. Rep. Arnold Simpson, D-Covington, said he wants such taxing districts to get approval from their fiscal courts to raise tax rates or fees.

Many of the taxing districts were established to fund new and needed services such as water or sewer service or local fire departments by local governments which didn’t have the money in their general funds to pay for those services.

Some, like libraries, however were established by voter referenda which might complicate legislation requiring them to get approval for funding from local governments. Thayer said lawmakers may need to look at any districts established by referendum before crafting legislation to govern all the districts.

Edelen plans to share his report and recommendations with lawmakers by the end of the year.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

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