Somerset —
The House Committee on Local Government has approved legislation that would strengthen oversight of more than 1,200 local taxing districts—including several that directly serve Pulaski County and two others that have an impact here.
The panel passed the measure on Wednesday, advancing it to the full House for consideration.
The measure sets up a system for auditing the taxing districts, which spend some $2.7 billion a year to operate rural fire departments, airports, sanitation districts, even libraries. It also would create an online database where taxpayers could review financial reports for each taxing district while also making their leaders subject to ethics rules.
Pulaski County's nine special districts include:
• Pulaski County Ambulance District;
• Pulaski County Health Department;
• Somerset-Pulaski Convention and Visitors Bureau;
• Pulaski County Conservation District;
• Pulaski County Public Library;
• Pulaski County Airport Board;
• Western Pulaski Water District;
• Pulaski County Solid Waste District; and
• Pulaski County Extension District.
In addition, Pulaski County is a member of Lake Cumberland Area Development District and Lake Cumberland Community Action District, both headquartered in Russell Springs.
Of Pulaski County's nine special disticts, Pulaski County Airport Board, Pulaski County Ambulance District and Western Pulaski Water District have not submitted audits to the state, according to a database recently established by State Auditor Adam Edelen. The database is available to the public on the internet at: www.citizenauditor.ky.gov. The airport board and ambulance district operate on tax proceeds, while the water district is non-taxing and operates on revenue generated from users. The conservation district, solid waste and convention bureau are also non-taxing, but nevertheless supported by tax revenue.
Edelen released a report last year showing Kentucky has 1,268 taxing districts that collect $1.5 billion in taxes and fees each year, plus $1 billion in government grants and private donations.
Back in November, Edelen characterized the system as “byzantine, a ghost government” and a “scandal.”
However on Tuesday, when Edelen stood with Democratic Speaker Greg Stumbo and several co-sponsors of the draft bill, he and Stumbo went out of their way to say most special taxing districts “do it the right way.”
“These bad examples should not disparage those who do it the right way,” Edelen said. Stumbo said it is a “credit to the Kentuckians that serve on the various entities that there hasn’t been rampant and widespread abuse.”
There have several publicized reports of widespread abuse and questionable spending at some larger taxing districts such as the Lexington Airport and Louisville Metropolitan Sewer District.
And late last year, Pulaski County Public Library was the object of a countywide campaign by disgruntled taxpayers to either dissolve the district, or to hold the library board to greater accountability.
Preventing abuse and strengthening accountability is the purpose of House Bill 1, resulting from Edelen's review.
The bill will require taxing districts to file reports with a central registry housed in the Department of Local Government; require annual financial reporting and audits; and authorize Edelen’s office to audit any which don’t comply.
Edelen said the bill puts “teeth in the law to compel compliance.”
Governing boards of such districts (libraries, conservation districts, water and sewer districts, some health districts) will be required to follow the local county’s code of ethics. An online database will allow taxpayers to see the districts’ financial reports and compliance status.
The bill will also clean up dozens of conflicting statutes governing various special taxing districts – often authorized to supply needed or desired public services which local governments couldn’t afford to provide from their general funds.
With Edelen and Stumbo were several co-sponsors and supporters, including members of leadership from both parties and both legislative chambers.
Senate Majority Leader Damon Thayer, R-Georgetown, who has pushed similar legislation in the past, said the issue’s “time has come” and predicted HB 1 “is going to sail through the Kentucky state Senate.”
While the bill appears to have overwhelming support, that isn’t to say there aren’t some with concerns.
Senate Republican Whip Brandon Smith worries about the impact of the bill on libraries. There are 106 library districts in Kentucky and Edelen’s review found all 106 in compliance with all reporting requirements. Smith is chairman of one of those library boards.
Some members of the legislature have said they’d like to give local governments power to appoint library board members and set tax rates for the libraries. But Edelen and his staff as well as Stumbo say nothing in the proposed bill will do that. It requires “accountability and transparency,” but does nothing to change the governance or funding structure of libraries.
Some libraries were established by voter referenda and the enabling statutes make no mention of taxes, instead mandating an appropriation of a prescribed amount from the local government, usually fiscal court.
There is at least one Court of Appeals case upholding those statutes, and even some supporters of HB 1 concede some library districts are not special taxing districts.
Edelen and his staff say that won’t change but the libraries will be required to submit financial information and otherwise comply with the requirements of the bill.
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