By Ronnie Ellis
CNHI News Service
FRANKFORT — The Republican-controlled state Senate on Wednesday passed an amended version of a bill aimed at providing accountability to special taxing districts, but the Democratic sponsor of the bill said he won’t agree to the change.
The amendment was added to the bill earlier in the day in committee by Sen. Damon Thayer, R-Georgetown, and would require the districts to submit any requests for tax increases to fiscal courts for their approval.
The bill passed the Senate 23-10, garnering the minimum number of votes for a bill which raises revenue in a 30-day session. The bill charges districts fees to pay for posting financial data online.
The vote was almost but not entirely on party lines: Sen. Carroll Gibson, R- Leitchfield, voted against it saying he fears the harm it may do libraries. Democratic Sen. Walter Blevins of Morehead voted for the bill to get it to a conference committee with the Democratic-controlled House.
Still, Blevins said Thayer’s amendment “hijacks” the original intent of the bill.
House Speaker Greg Stumbo, D-Prestonsburg, the bill’s original sponsor and state Auditor Adam Edelen, who called for the changes set out in Stumbo’s bill, both said they will not agree to Thayer’s amendment.
Thayer has long sought to make the districts accountable to taxpayers by making them get approval from elected county government officials for their budgets and any tax increases.
But in what he called “a spirit of bi-partisanship,” Thayer offered an amendment to give fiscal courts a veto on any tax increases by the districts which exceed the amount of revenue collected by the district the previous year.
Stumbo’s bill is the result of a massive review Edelen conducted of the taxing districts and calls for the districts to submit financial information to the Department of Local Government which would then post that information on a website available for public review.
Taxing district boards also would have to comply with their counties’ ethics code and any district which failed to submit the required financial information would be subject to a full audit by Edelen’s office with the cost borne by the taxing district.
But, Edelen has staunchly opposed getting into governance issues of the districts, many of which were created by fiscal courts to provide services which the local county government can’t afford from its general fund.
He has consistently told taxing districts he wouldn’t support putting fiscal courts in charge of the district’s taxing ability.
“I’m not going to go back on my word that was given to so many of the good people that were part of this process,” Edelen said after the committee vote Wednesday.
“This amendment hasn’t a chance of passing the House of Representatives,” Edelen continued. “There’s not an ounce of daylight between the Speaker of the House and I on this issue.”
Stumbo, too, said Thayer’s amendment is unacceptable and, “the vast majority of fiscal courts we’ve talked to don’t want that responsibility.”
Many county officials fear making them responsible for the districts’ taxing authority will make the counties responsible for the districts’ bonds and lower the bond ratings for counties.
Most of the districts were established after passage of House Bill 44 in the late 1970s which limits the growth of tax revenues to no more than 4 percent more than total revenues from the previous year. That limited local governments’ ability to fund growing service demands for such things as fire departments, conservation districts, libraries and water and sewer districts.
So they established the taxing districts with their own taxing authority. That authority is also subject to HB 44. Under the bill, a taxing entity has three options on setting tax rates: at a level to produce the same revenues as the previous year (compensating rate); at a level which will produce 4 percent more revenues (the percentage applies to the revenues, not the rates – it is possible as property values increase to lower the rate but bring in more revenue); or to raise the rate to produce more than 4 percent growth in revenues.
But the latter is subject to voter recall.
Thayer’s amendment would allow districts to set a compensating rate – producing the same revenue as the previous year – without fiscal court approval. But if a district wished to take the 4 percent rate, fiscal court would have 30 days to veto the change. If the court didn’t act within 30 days, the rate increase would automatically be approved.
Thayer told the committee his amendment would not affect the provisions of HB 44, but that’s incorrect. Under questioning after the meeting, Thayer reluctantly conceded the amendment does change the ability of a taxing district to take the 4 percent in revenue growth.
A conference committee made up of members from both chambers will have to reconcile the differences between the two bills if it is to become law – or one chamber will have to accede to the other’s bill which isn’t likely.
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at firstname.lastname@example.org. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.