Kentucky Auditor Adam Edelen does not like the changes the Senate made to a House-approved bill increasing oversight to the more than 1,200 taxing districts, but if that’s what it takes to get the law approved, the Kentucky House of Representatives should compromise and agree to those changes.
The bill is too important to be allowed to fail over an amendment for which we suspect many, if not most Kentuckians would be in agreement.
The provisions included in House Bill 1 would not be high on any legislator’s agenda if not for Edelen. Before becoming auditor in January of 2012, the special taxing districts that fund libraries, voluntary fire departments, soil conservation districts and other tax-supported entities had drawn only scant attention from state and county elected officials and from taxpayers.
But soon after becoming auditor, Edelen’s office launched a study of taxing districts that found the 1,268 taxing districts collect $1.5 billion in taxes and fees each year, plus another $1 billion in grants and private donations. He said the districts also hold about $1.3 billion in reserves. Because they’ve operated with little oversight, Edelen said called the taxing districts a “ghost government.”
Based largely on Edelen’s findings, House Speaker Greg Stumbo, D-Prestonsburg, sponsored the bill designed to give the taxing districts the oversight they needed and that the people belatedly demanded. Besides improved oversight, Stumbo’s proposal would create a centralized registry for taxing districts so that taxpayers and government agencies will know how many of them exist in Kentucky. And it would require leaders of local taxing districts to undergo ethics training and to answer to a local ethics commission, just as other government officials do.
With the full support of the appointed leaders of most taxing districts, HB 1 sailed through the House of Representatives by a vote of 96-1.
The Senate was expected to approve the bill with little or no changes. That is until at the insistence of Senate Majority Leader Damon Thayer, R-Georgetown, the Senate State and Local Government Committee amended the House bill to give elected county commissioners and magistrates the power to veto increases in taxes and fees imposed by local taxing districts.
Thayer insisted that the provision is crucial to the bill in that it gives elected officials the right to strike down hikes in taxes and fees, rather than leaving that to the sole discretion of appointees. “For me, it’s a deeply held philosophical belief that taxpayer dollars should not be expended unless there is some kind of oversight component by those who are elected by the people,” he said.
While it may come as a surprise to Edelen and the Democratic majority in the House, many Kentuckians also agree with Thayer. Tax increases should be approved by the people they elect, not by those dedicated but mostly unknown people who serve as appointed members of the boards of the special districts.
Edelen is irate over the Senate change saying that it could jeopardize the support of a broad coalition of local officials who has been pushing the legislation.
“To have that potentially jeopardized and lost over something that isn’t even germane to the bill that we have proposed, I think, represents a sad occasion,” Edelen said.
And to have a good bill fail to become law because legislators do not trust the elected leaders of county governments to have the wisdom to fairly judge the needs of local taxing districts would be an even sadder occasion. While we have not always been impressed by the wisdom — or lack thereof — displayed by members of county fiscal courts, they are elected by the people to serve their interests.
We think House Bill 1 is a good bill without the changes made by the Senate, but if that is what is takes to approve the bill, then so be it. As we understand it, the change would not allow fiscal courts to slash the taxes of the special districts; it would just give the power to prevent any tax hikes. That’s not unreasonable.
The House is scheduled to vote Monday on the amended Senate version. Let us hope reason prevails.