House passes bill to rein in Kentucky taxing districts
By CHRIS HARRIS, CJ Staff Writer Commonwealth Journal
The Kentucky House of Representatives took a big step on Friday toward shoring up accountability for special taxing districts in the state, which have recently come under fire both around the state and in Pulaski County.
The individual entities which are able to impose taxes to fund their own causes were found to often be lacking in oversight in a review conducted by State Auditor Adam Edelen last year. This led to the Kentucky General Assembly putting a focus on reigning in some of these taxing districts, which spend approximately $2.7 billion a year to operate things like fire departments airports, tourism boards, health departments, and more.
Pulaski County has nine special taxing districts of its own, one of which made headlines late last year when it drew the ire of a group of petitioners. The Pulaski County Public Library found itself in a precarious position when accepting the compensating tax rate amounted to an increase approved by unelected library board members. That spurred a petition to dissolve that taxing district in hopes of putting the library funding under the accountability of the Pulaski County Fiscal Court.
The problem was that according to state law, dissolving the taxing district for a library in debt would force the library to close its doors — and moreover, the tax would continue in order to pay off what’s owed.
Pulaski County Representative Tommy Turner voiced his support for additional accountability efforts, as was the idea behind the House’s vote Friday.
“I think they need oversight,” said Turner of special taxing districts. “I think any agency that receives taxpayer dollars needs to be accountable and have oversight.”
Part of the problem Edelen found was district that have not kept up with their legally required audits. The Pulaski County Public Library’s board had, as reported last year during the petition drive, but several others had not, as reported earlier this week by the Commonwealth Journal. Those that hadn’t submitted audits to the state included the Pulaski County Airport Board, Ambulance District, and Western Pulaski Water District.
Turner did not speak to any specific situations within his home county, but said that oversight was important “as a general rule” in these matters. He told the Commonwealth Journal he would need to make sure nothing had changed in the plan before completely giving it his stamp of approval, but was in favor of what had been proposed.
“I think the taxpayers have a right to know where any dollar they pays goes too,” said the Republican legislator for Pulaski and Laurel Counties. “I’ve always been someone who believes in more accountability from government.”
Edelen’s report last year showing 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 measure approved by the House Friday sets up a system for auditing the entities and would create an online database where taxpayers could review financial reports for each taxing district.
The House passed the measure 96-1, making it one of the first bills to clear the chamber this year. It now goes to the Senate, where it already is receiving favorable reviews.
"That it has moved through the House so swiftly speaks to the overwhelming need to bring transparency and accountability to a $2.7 billion layer of government," state Auditor Adam Edelen said. "I encourage the Senate to give similar treatment to this important legislation and deliver to taxpayers the reform that they deserve."
Besides improved oversight, Democratic House Speaker Greg Stumbo's proposal, House Bill 1, would require leaders of local taxing districts to undergo ethics training and to answer to a local ethics commission, just as other government officials do.
Although questionable spending has been identified among a handful of taxing districts, Stumbo said he believes most are operating lawfully and honorably.
"This is not an act in response to bad conduct," he said. "This is an act that compliments good conduct."