By Jack Brammer
FRANKFORT — State Auditor Adam Edelen’s proposal to strengthen oversight of more than 1,200 special taxing districts in Kentucky may face a tough time in the Senate.
The House approved House Bill 1 on Feb. 8 on a 96-1 vote, but Senate Majority Leader Damon Thayer said Friday he has several concerns about the measure.
“Some of us think that the bill doesn’t go far enough in terms of providing the proper oversight when it comes to budgets and taxes and rate increases by these special taxing districts,” said Thayer, R-Georgetown.
He later said one suggestion has been for county fiscal courts to approve the budgets of the special districts, “so that’s something we need to look at, too.”
Under the bill, special taxing districts would have to file their annual financial reports with an online state registry. The public database would allow people to keep tabs on how, where and why special taxing districts spend $2.7 billion each year.
Edelen, in a telephone interview, said Thayer has long advocated giving fiscal courts the ability to veto tax changes by special districts, but such a policy has “problems and would fracture the broad-based support this legislation has.”
Edelen, a Democrat, noted that Thayer participated in a news conference he held earlier this month to unveil House Bill 1. At that news conference, Thayer said the bill would provide disclosure, transparency, accountability and oversight of agencies with taxing authority.
Giving fiscal courts authority over the special districts “would double the size of local government, which is not a conservative value,” Edelen said Friday. “This would make the districts components of county government.”
Edelen said Thayer and he have been in regular contact about the bill. “We understand each other. I am optimistic that neither of us will jeopardize this important bill.”
Edelen issued a report in 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.”
Special districts can levy taxes and fees but are typically overseen by non-elected boards. Examples include water and sewer districts and library districts.
HB 1 would create a new term called “special purpose government entities” 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. It would cost about $250,000 from the state General Fund to set up the registry, although it would eventually be financed with fees collected from the special districts. The fees range from $25 to $500, and they vary based on the district’s annual revenue.
Thayer said he has some “concerns that the bill potentially centralizes too much power” with the state Department for Local Government in Frankfort.
The bill has the support of several diverse groups, including the Kentucky Association of Counties, the Kentucky League of Cities, Common Cause of Kentucky and the Bluegrass Institute.