The Richmond Register

Local News

March 14, 2013

County officials unhappy with compromise measure

Special taxing districts bill

FRANKFORT — When lawmakers worked out a compromise on a bill to provide transparency to special taxing districts, they trumpeted it as an example of bipartisan cooperation.

But Sen. Damon Thayer, R-Georgetown wanted to give local governments veto power over the districts’ tax rates, and he plans to try again next year.

Reaction from county officials so far is less than enthusiastic, although muted.

Most supported the original bill as sponsored by House Speaker Greg Stumbo, D-Prestonsburg, and pushed by State Auditor Adam Edelen. It provided accountability but no additional role for local legislative bodies.

“Most local officials preferred the original version of House Bill 1,” said LaRue County Judge/Executive Tommy Turner. “The amended version actually somewhat clouds transparency.”

That’s because the compromise offered by Sen. R.J. Palmer, D-Winchester, requires taxing districts (named “special purpose governmental entities,” under the bill), to make formal presentations to fiscal courts if they raise tax rates. But the courts have no say in the actual rates.

‘It’s going to force them into fiscal court, but we have no control over their tax rates,” said Greenup County Judge/Executive Bobby Carpenter.

Most local officials don’t want that control. They fear it might affect their own tax rates under a law which limits property tax increases and might adversely affect bond ratings.

They’re concerned the new requirements nevertheless will lead voters to believe, incorrectly, the local legislative bodies control the rates.

Last year, Edelen conducted a review of special taxing districts — usually established by local governments strapped for cash to deliver needed services like fire departments or libraries but sometimes established by voter referenda.

He found more than 1,200 such districts, a morass of laws and regulations governing them, and little public oversight.

Stumbo responded with a bill incorporating Edelen’s recommendations: requiring districts to report financial information to the state Department of Local Government which would then post it online; requiring board members to abide by local ethics codes; and empowering Edelen’s office to audit districts which didn’t comply.

Tax districts are governed by the same property tax restrictions as local governments. They can’t increase tax revenues by more than 4 percent without voter approval and must conduct public meetings even to do that. Their boards are appointed by locally elected officials.

But the public usually knows little about them. Stumbo and Edelen set out to correct that. But when the bill got to the Republican-controlled Senate, Thayer amended it to allow fiscal courts or local municipal governments to veto any increase.

Edelen and Stumbo would not agree. That’s when Palmer stepped in with his compromise.

But some local officials are upset they were left out of the last-minute negotiations. Palmer said Tuesday night, just hours after the bill passed, he’d already heard from some of them.

“I was just trying to save the bill,” Palmer said. “I was trying to find a compromise both sides could agree to and save a good piece of legislation.”

As local officials had time to study the final bill, they’re not as upset, but they still have reservations.

“After looking at it, it’s probably not as egregious as it could have been,” said Vince Lang, executive director of the County Judge/Executives’ Association. “We can probably live with the bill.”

Still, Lang, Richard Tanner, executive director of the Magistrates and Commissioner Association, and Shellie Hampton of the Kentucky Association of Counties (KACo) wish they’d been included in the final negotiations.

“The stakeholders should have been part of the final negotiations,” Lang said. “We worked with all the stakeholders through the whole year and we were all on board — but then we weren’t part of what they finally worked out.”

Tanner agreed: “We were not part of that negotiation on the compromise.’

Edelen said Thursday he shared the language of the compromise with stakeholders when Palmer suggested it, but Lang and Hampton said they did not see it until after the bill passed Wednesday night. Palmer and Edelen discussed the compromise earlier Tuesday with Hampton and Lang who asked them not to change in the original bill, Lang said.

Hampton said KACo preferred the original bill but will implement what was passed.

“While it is definitely not what we had all agree on when it was first proposed, we will implement it because it’s state law,” Hampton said.

Greenup County has approximately 20 tax districts which now must conduct public meetings in advance of Fiscal Court meetings and then appear before the court.

‘It’s going to clog up our court,” Carpenter said.

Carpenter and Tanner also object that the bill suggests all board members and districts are unfairly tarred with the sins of a few.

“These people are doing a good job,” Carpenter said. “We shouldn’t make good people look bad because of what a few bad actors have done.”

The bill lumps libraries under the special purpose governmental entities category, although some were created by voter referenda and some have no taxing power at all. State Librarian Wayne Onkst said he is still reviewing the final bill, “but generally we’re not unhappy.”

But Onkst and the others remain fearful about Thayer’s stated intent to try again next year to have require fiscal court approval of districts’ tax rates.

“That really concerns us — what might be on the table next year,” Tanner said.

Edelen’s assurance that wouldn’t be part of the bill was always the key condition for support from libraries, Onkst said.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

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