The Richmond Register

November 25, 2012

State auditor: Madison has 13 ‘special districts’

By Ronica Shannon
Senior News Writer

RICHMOND — The Kentucky Legislative Research Commission reported in 1968 that “It is almost impossible to obtain a complete and accurate list of all the special districts in Kentucky. No one knows exactly how many districts there are in the Commonwealth.”

Kentucky Auditor Adam Edelen this month released a report titled “Ghost Government: A Report on Special Districts in Kentucky.”

The 100-page report documents all of Kentucky “special districts,” including 13 in Madison County.

“Special districts are a multi-billion dollar layer of government – rivaling county governments in sheer size – that operate outside any uniform system of accountability,” Edelen writes in his report.

“Special districts number more than 1,200. In 117 of our 120 counties, taxpayers collectively pay more to these special districts than they do to their elected county governments. They hold well north of a billion dollars in cash reserves – twice that of the contingency funds of all 174 public school districts. Except in a few cases, these districts operate outside the ethics code of the counties in which they operate.”

Some districts – such as health departments, libraries, ambulance services and extension disticts –  are empowered to levy a property tax. Some may levy hotel or restaurant taxes, while others, such as utility districts, may charge fees. While members of their governing boards may be appointed by cities or counties, many districts operate mostly independent of their local governments.

Madison County’s special districts, some of which are not fully compliant with state requirements, include:

• Kentucky River Foothills Community Action Agency Development Council

• Madison County Airport Board

• Madison County Ambulance District

• Madison County Extension Taxing District

• Madison County Library Taxing District

• Madison County Public Health Taxing District

• Madison County Soil and Water Conservation District

• Madison County Tourism

• Madison County Water District

• Northern Madison County Sanitation District

• Red Lick Creek Watershed Conservancy

• Southern Madison Water District

• Valley View Ferry Authority.

(See the attached information box for compliance statuses and financial condition of each district.)

As defined in the report, “Special District” means any agency, authority or political subdivision of the state which exercises less than statewide jurisdiction and which is organized for the purpose of performing governmental or other prescribed functions within limited boundaries. It includes all political subdivisions of the state except a city, a county or a school district.

“Special districts were originally authorized in the 1800s, with new or revised types of special districts being statutorily authorized at different times over many decades,” Edelen said. “As new types of special districts were authorized, those statutes were, in most cases, simply added to existing statutes, resulting in the complex, confusing, sometimes contradictory and vague patchwork of statutes that we have today.”

Four central themes are found throughout the reports findings and recommendations: The need for statutory reform; stronger safeguards or “teeth” in the laws and regulatory framework to compel compliance; establishment of a centralized registry for special districts; and the need for education of stakeholders.

In his report, Edelen suggests that creating a central registry for districts, providing refined reports and refining requirements will lead to more transparency and efficient government.

“Perhaps the most persistent problem identified in our findings is the confusion associated with trying to reconcile and understand the various statutes that apply to each type of special district,” Edelen said.

“Policymakers must have clarity to govern effectively; however, clarity is precisely what is lacking in the statutes and regulations that govern special districts. Statutory reform, including a requirement that special districts comply with existing county ethics codes, is absolutely essential if Kentucky is to become a national leader in special district governance.”

Visit http://apps.auditor.ky.gov/ public/theregistry/cai.html for a county-by-county look at Kentucky’s special districts. Click on the district’s name and a monetary breakdown of budgeted revenues and actual revenues will be given.

A closer look:

Madison County’s 13 districts were graded on four criteria that are mandatory and graded/reviewed by the state auditor’s office: Survey, Audit, Budget and UFIR (Uniform Financial Information Report), which is required by the Department of Local Government. If a monetary amount is listed, it represents the difference between a district’s budgeted revenues and actual revenues. If no amount is listed, then the district has an even balance.

• Kentucky River Foothills Community Action Agency Development Council: Compliant in all areas UFIR not available; $5,595,156.

• Madison County Air Board: Compliant with budget, not compliant on survey and UFIR; audit status not known; monetary information not provided.

• Madison Count Ambulance District, compliant with budget and UFIT, non-compliant on survey; audit status not known; monetary information not provided.

• Madison County Extension Taxing District, compliant in all areas, $74,641.

• Madison County Library Taxing District, compliant in all areas, $623,720.

• Madison County Public Health Taxing District, compliant in all areas; audit status is unknown.

• Madison County Soil and Water Conservation District, compliant in all areas except UFIR which was not available; -$329,272

• Madison County Tourism, non-compliant in all areas. (Editor’s Note: Richmond and Berea have city governments have created tourism commissions, both of which levy taxes on hotel room rentals. Berea also taxes restaurant bills. However, what the auditor lists as Madison County Tourism appears to be dormant.)

• Madison County Water District, compliant with budget, non-compliant on survey; UFIR not available; audit status unknown; monetary information not provided.

• Northern Madison County Sanitation District, compliant in all areas, $89,091.

• Red Lick Creek Watershed Conservancy, compliant in all areas, $13,540.

• Southern Madison Water District, compliant with budget, non-compliant on survey; UFIR not available, audit status unknown; monetary information not provided.

• Valley View Ferry Authority, non-compliant in all areas; audit status unknown; monetary information not provided.