The Richmond Register

February 20, 2013

State auditor voices opposition to amending taxing district oversight bill

Edelen speaks to Madison County’s Women’s Network group

By Sarah Hogsed
Register News Writer

RICHMOND — During his Tuesday night speech in Richmond, State Auditor Adam Edelen said he would do his best to “kill” House Bill 1 if the Republican-controlled Senate amends the legislation to give county governments control over special taxing districts.

Edelen was the guest speaker at a meeting of the Madison County chapter of the Women’s Network. He spoke about his investigation into the state’s 1,268 special taxing districts, the results of which were released late last year.

House Bill 1 was created in response to that investigation in an effort to provide more “transparency and accountability” to the public about taxing districts’ revenue and spending, Edelen said.

Special taxing districts are typically governed by boards that are empowered to levy taxes and/or fees to support specific community services, such as libraries, health departments, ambulance services and utilities. While members of their governing boards may be appointed by cities or counties, many districts operate mostly independent of their local governments.

The state auditor’s report found Madison County has 13 special districts. By law, special districts may increase property tax rates to bring in up to 4 percent more revenue each year without the hike being subject to a referendum.

Edelen focused the end of his talk on how the state senate was attempting to “high-jack” HB 1, which aims to create a public online registry for taxing districts’ financial records as well as create serious penalties if districts do not file these reports.

House Bill 1 passed the Democrat-controlled House 96-1.

“I can’t remember the sorehead who voted against it,” Edelen said to several chuckles from the audience. “... he’s not one of the bright lights.”

Rep. Lynn Bechler, a first-term Republican from Crittenden County, was the lone vote against the bill, according to the Legislative Research Commission’s records.

Some Republican state senators have said they did not feel the bill goes far enough and have talked of amending the bill to give local fiscal courts the ability to approve or veto special taxing districts’ budgets and tax rates.

Because most special taxing districts were created by popular vote, Edelen said the Republican senators were trying to “usurp the will of the people.”

Edelen said the main purpose of HB 1 is to increase accountability and transparency of special taxing districts, not change how they are governed or financed.

Making fiscal courts directly responsible for the governance of special taxing districts would essentially double the size of county governments, the state auditor said. Also, any debt the special districts carry would become part of that county’s overall debt, which could affect a fiscal court’s ability to issue bonds for sewer, road and other infrastructure improvements.

Edelen made sure to state the majority of special districts are run properly and responsibly by their boards, and he specifically complimented attendee Jimmy Cornelison, who is the director of the Madison County EMS. That service is funded by a special taxing district.

Although state law requires a special taxing district to file its budget with the local fiscal court and conduct annual audits if its annual revenue exceeds $750,000, there’s currently no penalty if the district does not comply, Edelen said.

Under House Bill 1, if a special taxing district does not file its annual paperwork with the new public registry, an automatic audit by Edelen’s office would be triggered.

“The act of being observed fundamentally changes behavior,” Edelen said, comparing it to parents who are watching their children to keep them on their best behavior.

Edelen said he was “optimistic” HB 1 would pass the Senate as it is as long as legislators do not play politics and do what’s best to help Kentuckians be better watchdogs over their tax money.

“ … we’ll leave an awesome historic legacy for our kids,” Edelen said.

Sarah Hogsed can be reached at shogsed@richmondregister.com or 624-6694.