Herald-Leader Editorial2013 General Assembly

Set the rules for special taxing districts

transparency, uniformity needed for handling of taxpayer funds

February 24, 2013 

If you polled Kentucky senators asking if they favor transparency and efficiency in government, it's likely 100 percent would say "yes."

But somehow that body has not been able to move a bill to bring some order, efficiency and light to the tangled maze of special districts in Kentucky.

The legislation, House Bill 1, passed the House 96-1 Feb. 8, landed in the Senate on the 11th, and on the 13th was referred to the State and Local Government Committee. And there it stopped. No hearing, no vote, nothing.

This legislation grew out of last year's investigation by the state auditor's office on special districts. Throughout Kentucky they create and collect taxes to build bridges and airports, provide drinking water and sewer systems, fund soil-conservation districts, libraries and tourism offices. There are at least 1,200 of them controlling $2.7 billion in public funds annually.

But there's no uniform definition of special districts; no system for tracking them, assessing their effectiveness, reporting to the public, or even dissolving them.

As a result, even well-run special districts have trouble complying with confusing, sometimes conflicting requirements. And the public has little way of knowing what they are, what they spend or what they do.

This bill streamlines reporting, standardizes definitions and audit requirements, and improves transparency by creating an electronic database accessible to all, 24/7.

It has the support of Common Cause and the conservative Bluegrass Institute. It's been endorsed by the Kentucky League of Cities, and associations representing counties, county judge/executives, magistrates and commissioners.

So, what's the problem?

The most common objection is that House Bill 1 doesn't go far enough. People saying this, such as Senate Majority Floor Leader Damon Thayer, R-Georgetown, think special districts are taxation without representation because their boards are appointed by elected officials, not elected themselves.

They want county fiscal courts to approve taxes imposed by special districts.

This poses both legal and practical problems. If fiscal courts approve special district taxes, they could be considered part of county government, possibly jeopardizing the ability of both the county and the district to issue bonds.

There is also the political reality — evident in the pension crises — that elected officials don't always meet government obligations. What if a fiscal court voted down taxes to pay off bonds for a water or sewer system? Plus, too many fiscal courts struggle to manage their current budgets appropriately.

Equally important is that we simply don't know enough yet to make good decisions about this. It makes more sense to enact this legislation, get a good handle on special districts, learn which operate well and which don't and then, if necessary, tighten governance.

It's also possible that the problem may be, in part, politics.

The majority Democratic House made this, literally, its No. 1 bill and passed it overwhelmingly. Auditor Adam Edelen is a young, clearly ambitious Democrat. The Republican-controlled Senate may be in no hurry to give him or his party any victories.

At the risk of sounding naive, this is that rare thing in Frankfort: a good-government bill that both parties could claim as a victory.

The Senate should take it up as is and pass it, soon.

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