Herald-Leader Editorial

Put light on special taxing districts; Thayer suggestion could scuttle reform

thayer suggestion could scuttle chances for reform in this session

February 10, 2013 

It's hard to get a handle on the morass of laws that govern special districts around Kentucky. They're so complex, arcane and contradictory that some basic questions can't be answered, such as how many special districts there are, how much money they actually control, or how to shut one down if necessary.

Despite this mess, there are at least 1,200 special districts, several in each county, controlling about $2.7 billion a year, more than the counties themselves.

That's why the Senate must follow the lead of the House, which Friday on a vote of 96-1, passed House Bill 1, the ambitious legislation drafted to bring clarity and transparency to these districts that provide basic services like drinking water, emergency and fire protection and libraries.

Addressing a committee last week, Speaker of the House Greg Stumbo, D-Prestonsburg, noted the confusion hurts citizens on special district commissions who are trying to comply with laws no one understands.

"A lot of times they didn't do anything wrong, or at least they didn't intentionally do anything wrong, they just didn't know what to do right."

Perhaps worse, it can be very hard to discover when they aren't even trying to do things right, and few sanctions if they do go astray.

HB 1, which grew out of months of work by the office of State Auditor Adam Edelen, addresses some very basic issues. Key provisions:

1. Create a new, single definition encompassing special districts and entities that provide the same services.

2. Streamline reporting, eliminating multiple and overlapping reports in favor of a single, electronic report submitted to the Department of Local Government. Those will be available 24/7 in a database operated by DLG.

3. Clarify audit standards. Now, only districts with receipts of $750,000 or more are audited annually. That's lowered to $500,000; $100,000 to $500,000 will be audited every four years; procedures will be worked out individually for smaller districts.

4. Compel compliance. If districts don't file annual reports they could be subject to audits at their own expense, withholding of state funds, and a notice of non-compliance published in a local newspaper. The only way to address noncompliance now is through legal action by the county attorney, something Edelen said has happened only once in several decades.

5. Require each district to adopt a code of ethics. DLG must provide training on ethics, governance and legal requirements.

6. Establish a uniform process to dissolve districts when that's necessary.

This measure has widespread support, including associations representing county judges, county clerks and the counties themselves.

Despite this, Senate Majority Floor Leader Damon Thayer, R-Georgetown, and others have suggested amending the bill to require county fiscal courts to approve tax increases by special districts.

That might seem to improve accountability, but all of the people who oversee special districts are either appointed by elected officials or elected themselves, so voters already have a say. Also, such an amendment presents constitutional and practical problems that could limit the ability of counties and special districts to provide services.

This is true and overdue reform legislation. Pass it now.

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