State Auditor Adam Edelen refers to himself as the “taxpayer’s watch dog.” It’s his job, he says, “to follow the state taxpayer dollar wherever it goes.”

But when it comes to following the taxpayer dollar through the maze of special taxing districts set up statewide, to do local tasks as diverse as running a fire department to providing water and sewer service, the auditor has found the task is almost impossible.  

No one, not his office, the Kentucky Department of Revenue nor the Department of Local Government even knows how many special districts there are or how much money they collect from taxpayers annually.

“While special districts represent the most prevalent level of local government, it is certainly the least understood,” Edelen told a crowded room of special district and county fiscal court officials at the FIVCO Area Development District offices on Tuesday. “It’s a scandalous mess. We’ve got to have a better system.” 

Since taking office in January, Edelen has been gathering information on special districts statewide, and conducting meetings across the state like Tuesdays in an effort to determine the scope of the problem. His office is collecting surveys from each special district they can find in order to create a “master list” of statewide districts.

He estimates there are as many as 1,800 special districts in the state, which could collect between $500 million and $1.5 billion annually in taxes and fees. There are 43 categories of special districts, 20 of which can collect “fees” and 23 of which can “tax.” A network of more than 1,000 statutes, dating back 100 years, governs the districts.

By November, Edelen hopes to know how many districts there are, where they are, the amount of money they collect and their compliance with current laws. The information will then be compiled into a database accessible via a website, where constituents can search districts county by county.

At first the site will only provide a “snapshot of where we are at that moment,” Edelen said, in order to get a “better idea of where we are and where we are going so we can move forward.” The goal is total compliance by districts under the rules now in place.

“We’re trying to find our way through a system, where the lights have been turned off for quite some time,” he said.

Edelen will then make recommendations to the legislature on ways they can further reform the system to compel compliance and ensure transparency for taxpayers. He also hopes to modernize the system so it makes more sense, and doesn’t lump districts with distinctly different missions together.

He envisions a single centralized reporting agency, where all special districts would file a single annual financial form. Edelen also believes more “teeth” need to be added to current laws to force compliance among districts that do not meet current standards.

Making training available statewide to officials serving on the boards of those special districts, as well as the elected officials charged with overseeing them, is also needed and will assist with compliance, he said. “Everybody needs to know what their role is,” he said.

“I’m not going to hang anyone out to dry that doesn’t deserve it,” he told officials at the meeting. “If you are doing the right thing or trying to do the right thing, you have nothing to fear from this process and will come out better because of it. If you are not doing the right thing, you ought to be losing some sleep because, for the first time ever, we’re going to be able to make some distinctions between who is doing the right thing and who isn’t,” he said.

CARRIE STAMBAUGH can be reached at cstambaugh@dailyindependent.com or (606) 326-2653.

 

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