Mt. Vernon Register-News

February 8, 2013

Special taxing bill sails through the House

Ronnie Ellis
CNHI News Service

FRANKFORT — A bill to require more uniform reporting of financial information by special taxing districts sailed through the House 96-1.

House Bill 1 was sponsored by Speaker Greg Stumbo, D-Prestonsburg, after a review of the 1,260 or so special districts by state Auditor Adam Edelen indicated many do not comply with administrative and financial reporting systems.

Edelen began his review in the wake of several publicized reports of widespread abuse and questionable spending at some larger taxing districts such as the Lexington Airport and Louisville Metropolitan Sewer District, both of which were investigated by Edelen’s predecessor Crit Luallen.

Edelen’s review indicated the 1,260 or so districts spent a total of about $2.7 billion — although most of that is accounted for by larger districts.

The bill will require taxing districts to file reports with a central registry housed in the Department of Local Government and submit annual financial reports and audits.

The legislation provides for annual fees to be paid by the taxing districts — $500 for the largest, $25 for the smallest — to pay for the registry and the tracking of information. It also allows Edelen to audit any taxing district found to be out of compliance by DLG.

That, Edelen said this week, puts “teeth in the law to compel compliance.”

Governing boards of such districts (libraries, conservation districts, water and sewer districts, some health districts) will be required to follow the local county’s code of ethics. An online database will allow taxpayers to see the districts’ financial reports and compliance status.

When Edelen released his report in November, he described a “ghost government” system over which there was not public accountability and he detailed numerous abuses by various districts.

But when Stumbo took to the floor Friday to urge passage of the bill, he said it “is not a bill in response to bad conduct,” but one which is “really a tribute to the honesty and dedication of all those . . . who have done their jobs efficiently and in a trustworthy manner.”

Stumbo said the legislation will “simplify, streamline and clarify reporting requirements while at the same time giving every Kentucky taxpayer the power to track the use of their tax dollars.”

Nearly everyone on the House floor Friday agreed – nearly.

Freshman Lynn Bechler, R-Marion, said he voted no because of the fees and reporting requirements may burden some of the smaller districts and he fears the bill will add additional costs to taxpayers to monitor the districts.

He said an analysis by the Legislative Research Commission “talks about the possibility of additional costs” to the state.

“I’m just not comfortable with that,” Bechler said.

The bill now goes to the state Senate.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.