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LOUISVILLE, Ky. (WDRB) -- Kentucky Auditor Adam Edelen says he has identified 1,200 "special districts" in Kentucky that represent a $2.7 billion layer of government that has the power to tax, but operates with "little oversight or accountability."
Calling the discovery a "scandal," Edelen said unelected entities such as libraries, sanitation districts and public health departments have been "operating in the shadows for decades."
"It is a scandal that for generations no Kentuckian has been able to determine how many special districts exist, how much money flows through them, where they are located and whether they are compliant with state law," Edelen stated in the news release.
After a six-month investigation, Edelen's office has created the "Citizen
Auditor Initiative" database and "Ghost Government: A Report on Special
Districts in Kentucky" to survey known special districts and
local elected officials and examine more than 1,000 statutes that govern the
most prevalent form of government in the Commonwealth.
The effort found
that special districts collect $1.5 billion in taxes and fees and another $1
billion in grants, corporate sponsorships and fundraising. In all but three
counties, taxpayers pay more to special districts in property taxes than to
their county governments, according to the news release.
districts spend $2.7 billion a year, which is about $5 less per capita than the
state spends on primary and secondary education. And, they are holding another
$1.3 billion in reserves – twice the contingency funds of all 174 school
"To be sure,
there is a difference between the districts themselves and the scandalous lack
of system-wide oversight of them," Edelen said in the news release. "Their work is critical to the
communities they serve, many board members put in considerable hours on a
voluntary basis and the vast majority are honest stewards of the tax dollars
"The effort found
that the current system treats special districts that comply with state laws the
same way as those operating outside of it," the news release states. "The status quo is a muddled morass of
statutes, bizarre classifications, uncertain responsibilities, confusing
mandates and the absence of meaningful tools to compel
Forty percent of
the special districts that should have submitted budgets to their fiscal courts
did not; 15 percent that should have submitted Uniform Financial Information
Reports (UFIRs) did not.
half the special districts with revenues greater than $750,000 a year failed to
have required audits conducted on their financial statements. That represents
$461 million in revenue that had no oversight.
"In short, the
system is broken and in need of big change," Edelen said. "A reformed and
modernized system will make this ghost government more accountable to the public