By Jack Brammer
FRANKFORT — More than 1,200 special taxing districts in Kentucky would have to file their annual financial reports with an online state registry under a proposal aimed at helping Kentuckians track the state’s “ghost government.”
The public database would allow people to keep tabs on how, where and why special taxing districts spend $2.7 billion each year, said state Auditor Adam Edelen and House Speaker Greg Stumbo, who unveiled House Bill 1 Tuesday at a news conference in the Capitol Annex.
The 102-page bill has attracted wide-ranging and bipartisan support from industry and advocacy groups. It is to be considered Wednesday in the House Local Government Committee.
“This is an important piece of legislation, one that will go a long way in ensuring that Kentucky taxpayers know how their hard earned money is being spent,” Stumbo said.
The news conference attracted several Democratic and Republican lawmakers. Senate Majority Leader Damon Thayer, R-Georgetown, said the bill would provide disclosure, transparency, accountability and oversight of agencies with taxing authority.
Edelen issued a report last November that showed numerous examples of special districts wasting taxpayers’ money. He found that even basic information on special districts, such as contact numbers and addresses, was sometimes difficult or impossible to identify.
He called the special districts “a $2.7 billion layer of ghost government in the Commonwealth.”
Kentucky’s special districts can levy taxes and fees but are typically overseen by non-elected boards. Examples include water and sewer districts and library districts.
The number of special taxing districts varies by county. Jefferson County, the state’s most populous county, has 33 special taxing districts. Marshall County, with a population of 31,000, has 23 special districts. Fayette County, which has more than 300,000 people, has nine special districts.
HB 1 would create a new term called “special purpose government entities (SPGE)” for reporting purposes. The term covers existing special districts as well as entities that have similar characteristics.
For example, some fire departments and housing authorities would fall under the proposed regulation even though they don’t have taxing authority, Edelen said.
Like special districts, the similar agencies generate or receive public funds, are governed separately from the city or county where they operate, and have budgets and financial information separate from the city or county where they operate.
The new online registry would be administered by the Department for Local Government.
Edelen said the registry would cost about $250,000 from the state General Fund to set up, although it would eventually be funded with fees collected from the special districts. The fees range from $25 to $500, and vary based on the district’s annual revenue.
If a special district failed to comply with the law, the Department for Local Government would notify the state auditor after 30 days. The auditor then would warn of a possible audit at the district’s expense.
The state Finance and Administration Cabinet also would withhold all state funds from the district. A notice of non-compliance would be published in the newspaper of general circulation in the area where the district operates. The cost of the notice would be billed to the SPGE.
Stumbo said he has not heard of “any real opposition to the bill.” He did note that some water districts had concerns.
Edelen noted that the bill has the support of several diverse groups, including the Kentucky Association of Counties, Kentucky League of Cities, Common Cause of Kentucky and the Bluegrass Institute.