Fiscal courts should approve special district budgets and tax rates
by Cheryl Avioli
I moved to Kentucky in 2008 when the economy crashed. Our family decided that it was time for us to live by a budget in order to avoid our own fiscal cliff. Each of us puts our receipts into a jar. At the end of the month, we painstakingly open the lid and review each receipt to match our credit card statements, and to see how we are doing in meeting our budgeted expenses. By careful examination, we discovered unauthorized charges. We also realized that certain months we had to spend less in order to stay within our budget. Planning for the future, and accounting for it today, is our reality.
Families all across Kentucky have to do more with less. We are tightening our belts and so should government. Each of us needs to pressure our state legislators to do the right thing this session when it comes to special taxing districts. We need to wake up and notice that these little districts sure add up and cost us dearly in taxes. We pay $2.7 billion on special districts every year, and about $1.3 billion more of our money is being held in reserves. Special districts spend more in taxes than county governments except in three counties. They provide special public services such as fire districts, libraries and roads.
No elected official – not one – is directly responsible for approving or overseeing this money! No elected official is responsible for approving special district budgets, debt load, or tax rates! So, you see, this makes it really easy for elected officials to blame “someone else” for taxes. The current system was designed by elected officials to allow every elected official in the state to hide from tax increases.
In America, we pride ourselves on having an elected government to represent our interests and make the hard decisions. We vote for people who deal with the tough issues. We need strong leaders who take a stand. Elected officials should be approving special districts budgets and tax rates, and they should be counting this money in a broader context for public planning of scarce public resources.
Good news is our state legislators seem to be making this a priority. They should consider the following solutions this session:
Every county has a fiscal court judge who is in a position to approve special district budgets and tax rates. Fiscal courts approve the creation of these districts; they should oversee them too. It’s common sense.
Special districts that don’t comply with financial reporting requirements or that have negative audit findings should be dissolved and revert to the county.
Specific reserve funds should be set and anything over that refunded to the public.
Special districts that are run by the county but file their financials separately from the county should be identified in state law as special districts. Many argue they aren’t a special district so they are above the law. What are they hiding?
State approval should be required before debt is incurred by special districts, or service territories are extended. State elected officials should determine if taxpayer debt is in the public interest and whether there is a duplication of services before extending districts.
An annual list of average costs of special district services should be posted by the State so citizens and officials have context when considering just and reasonable tax rates.
Some officials might only be willing to approve the creation of a new statewide database of special districts. The creation of a database will not alone cure this problem. It can be a helpful tracking tool but if it is too costly or presents misleading information to the public, it will make the problem we have worse.
Politicians cannot delegate regulatory authority to a database. A database is not going to ask the tough questions of special district board members in a public setting. A database is not going analyze or punish special district board members for negative findings in audit reports. A database is not going to approve rates. A database is not going to approve whether a special district should incur debt. A database is not going to recommend other sources of financing. A database is not going to reduce redundant or inefficient spending practices.
If the database only shows whether special districts filed reports, it will not be helpful. It’s the substance of the reports that is essential and elected officials need to be studying them, holding public meetings about them and making these documents a part of the public record.
Contact your legislator. Ask that he or she muster up the courage to take the lid off of the jar to examine special district receipts before approving further expenses. Families all across Kentucky are doing some version of this, why can’t they?
Cheryl Avioli was hired to study special districts for Kentucky Auditor Adam Edelen and offers this viewpoint. She was a Commissioner on the Public Service Commission in New York before moving to Kentucky.
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