Auditor: Kentucky's special taxing districts 'operating in the pitch black'

bmusgrave@herald-leader.comJune 27, 2012 

State Auditor Adam Edelen spoke on Monday, April 30, 2012 at the Auditor of Public Accounts office in Frankfort, Ky. Photo by David Perry | Staff

HERALD-LEADER

FRANKFORT — The first-ever database and inventory of all special taxing districts in Kentucky should be completed by the end of this year, State Auditor Adam Edelen told a legislative committee Wednesday.

Special districts may levy taxes and fees on citizens but are rarely overseen by an elected official. There is no central oversight of most special districts and no one watching to see how taxpayers' money is spent, Edelen told the Interim Joint Committee on Local Government.

Some of Kentucky's most prominent spending audits in recent years have involved special districts, including Blue Grass Airport, the Lexington Public Library and the Louisville and Jefferson County Metropolitan Sewer District. Other special districts include some fire departments, soil and water conservation districts and county health departments.

"They aren't just operating in the dark, they are operating in the pitch black," Edelen said.

His office is collecting information from county fiscal courts and other government organizations on the number of special districts in Kentucky. His office will collect those organizations' financial information and put it on the auditor's Web site so people may examine the finances of special districts.

It is thought there are 1,000 to 1,800 special districts in Kentucky that spend $500 million to $1 billion of taxpayers' money. Those districts are overseen by boards that are typically appointed by a county judge-executive or a mayor.

Sen. Damon Thayer, R-Georgetown, has pushed for legislation that would give a county fiscal court veto power over any potential tax increase levied by a special district. That legislation has failed repeatedly to gain traction as special district employees and board members actively opposed it, he said.

The boards of those special districts are volunteers who do a great job, Thayer said, "but they are one step removed from the accountability of the voters."

Edelen said the vast majority of special districts have nothing to fear from his efforts. Most have very efficient operations. However, the current system does not allow special districts to show they are good stewards of taxpayer money, he said.

There are more than 43 types of special districts and myriad statutes governing them in Kentucky. The Department of Revenue oversees nine classes of special districts, and all special districts are supposed to send financial information to the Department of Local Government. However, there are no penalties if districts do not provide the information.

"It's not just a mess, it's a scandal," Edelen said of the current system of tracking local special districts.

He said the auditor's office also might release recommendations by the end of the year on ways to improve oversight and accountability of special districts. One recommendation is to create a central registry for special districts, Edelen said.

Thayer said he hopes Edelen's efforts to better track special districts will spur the legislature to create more oversight of the districts.

"This is a significant issue that we're going to have to deal with as the number of special districts continues to grow," Thayer said. "The dialogue in the country has changed. ... The taxpayers are now more focused on accountability."

Beth Musgrave: (502) 875-3793. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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