House Dems To Make Tax Districts Top Legislative Priority

Nov 29, 2012

FRANKFORT, Ky. -- Holding accountable more than 1,200 special taxing districts that spend some $2.7 billion a year will be a top legislative priority when lawmakers convene just over a month from now.

The issue beat out pension reform, tax reform and a proposed constitutional amendment on gambling for the designation of House Bill 1, which is reserved the biggest issues facing the state.

Taxing districts, which collect money to operate everything from rural fire departments to libraries, have proliferated across Kentucky over the past 50 years with little accountability.

House Speaker Greg Stumbo said Thursday that creating a stronger system of oversight is a critical issue that lawmakers have to address.

"This one takes on significance particularly because how many lives it impacts across Kentucky and how much money is involved," Stumbo said.

Stumbo, a longtime lawmaker and former state attorney general, said he was shocked by a report from state Auditor Adam Edelen that showed the number of taxing districts in the state and the amount of money they collect and spend.

Edelen had his staffers undertake a 6-month review that determined 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.

The districts also hold $1.3 billion in reserves, which the auditor noted was twice the contingency funds of all the state's 174 school districts.

Edelen's staff found that about 40 percent of the taxing districts required to submit budgets to elected leaders in fiscal year 2011 did not, and just 55 percent of districts with revenues or expenditures exceeding $750,000 underwent annual audits.

"Special districts in Kentucky represent a ghost government," Edelen said Thursday. "What I mean is that we have had compounding generations of neglect in oversight that created a level of government that exists, frankly, between worlds."

Besides improved oversight, the legislation that Stumbo and Edelen are drafting would create a centralized registry for special districts and establish ethics training for the leaders and staff members working for taxing districts.

"The people of Kentucky deserve a system of oversight for what very well may be the second-largest level of government in Kentucky," Edelen said.

Stumbo, D-Prestonsburg, said the taxing district issue beat out tax reform for top billing in the House primarily because recommendations being bandied about by a panel appointed by Gov. Steve Beshear to study the issue don't "rise to the level of boldness that some of us would have hoped."

Stumbo said recommendations for pension reform aren't controversial. He predicted that a proposal for pension reform would pass in some form in the next legislative session.

And Stumbo gave a proposal to legalize gambling by passing a constitutional amendment better chances this year because of leadership changes in the Senate.

One of the leading gambling opponents, former Senate President David Williams, has resigned to take a judicial appointment, triggering an election that led to changes in top leadership.

The incoming Senate floor leader, Republican Damon Thayer of Georgetown, is one of the state's leading gambling supporters. And Stumbo said the incoming Senate president, Republican Robert Stivers of Manchester, appears willing to talk with Democratic House leaders and the Democratic governor who has pushed for gambling since he took office in 2007.

"I think that the chances are better only in the sense that it creates the chance for new dialogue," Stumbo said.