State Sen. Damon Thayer, R-Georgetown, made clear Wednesday he wants a bill to provide transparency and accountability for special taxing districts to go beyond what Auditor Adam Edelen and House Speaker Greg Stumbo have urged.
Edelen appeared before the Senate State Government Committee to explain the bill, which passed the House 96-1.
It would require all special taxing districts to submit financial reports to the state Department of Local Government, which would post the information on a central online database where the public could view them.
The law would authorize DLG to alert Edelen of any district that was out of compliance with requirements for audits or financial reports which would then trigger a special examination by the auditor. And it would require special taxing districts to conform to the local government’s Code of Ethics.
But that’s not enough, Thayer suggested.
“I’m not quite sure the bill goes as far as I’d like it to as far as oversight,” Thayer said.
He went on to suggest that it could be improved by requiring all such districts to submit their tax rates or requests for increases to the local fiscal court.
He said that sounds good in theory but won’t work so well in practice. Doing that will make the districts component elements of county governments, he said, and that means the districts’ debt obligations and finances could affect the county’s own bond rating.
Edelen said it is also unnecessary because most districts are in compliance; the provisions of the bill passed by the House will require those not already in compliance to become compliant or face additional scrutiny and possibly even dissolution.
And finally, Edelen said, nearly every special taxing district’s board members are appointed by the fiscal courts.
But Thayer said without that oversight by elected officials, the special taxing districts essentially provide “taxation without representation.”
“I am trying to develop a committee sub (to HB 1) for this committee to consider before this goes to the Senate floor,” Thayer said. “I hope we can come to some kind of agreement so this can pass this session.”
The bill, as passed by the House, is supported by a variety of groups, including counties, libraries and other associations of taxing districts.
But many of those have said they will not support the measure if it includes requirement of tax rates and budgets by fiscal courts.
And Edelen has told those groups he can’t support that provision either.
Several high-profile special taxing districts like Metro Sewer District in Louisville and the Bluegrass Airport in Lexington have in recent years been exposed for wasteful and questionable spending. But Edelen’s review of taxing districts last fall found most are in compliance of current reporting regulations.
For instance, out of 106 library districts, all 106 were in compliance — and some libraries were created by voter referendum and are not created under statutes that establish special taxing districts.
Most special taxing districts were created after passage of House Bill 44 in the late 1970s capping the rate at which property taxes can increase.
That put pressure on local governments who also faced pressure from citizens seeking such services as water and sewer or fire departments. County governments often created the districts to provide needed services for which the fiscal court didn’t have the funding resources.
RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at email@example.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.