House Bill 1 addresses special districts

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 The State Senate voted 23-10 Wednesday to pass House Bill 1, which will reform a $2.7 billion layer of government in the Commonwealth. The bill, however, was amended in the Senate State and Local Government Committee earlier in the day to give fiscal courts control over special districts – a proposal that Auditor Adam Edelen, House Speaker Greg Stumbo, who is the bill sponsor, and the majority of fiscal courts oppose. 

“House Bill 1 represents a historic opportunity to bring accountability and transparency to special districts,” Edelen said. “It would be a travesty to jeopardize the chance of passing meaningful reform this session to address a governance issue that hasn’t been studied and would jeopardize special districts‚ ability to deliver vital public services.”

The measure is likely headed to a conference committee that will negotiate a final version.   

The bill – in its original form – streamlines Kentuckians’ ability to track how, where and why their money is being spent. The bill codifies reporting requirements for entities raising and spending taxpayer dollars while creating a centralized online registry where the public can gather information on and track spending by these organizations.  

Edelen’s office was asked to help develop the legislation after it released a comprehensive report on the more than 1,200 special districts in Kentucky and found that, while most special districts performed a valuable services and were stewards of taxpayer’s funds, there were numerous examples of special districts that were not. 

House Bill 1:

• Addresses confusion of what is and is not a special district by creating a new definition for reporting and auditing purposes. 

• Clarifies audit requirements

• Requires special districts to electronically submit administrative and financial information to the Department of Local Government. The information would be posted in an online registry and available for public inspection.

• Establishes education and ethics provisions to make sure special districts are acting as good stewards of the public’s dollars. 

• Creates a clear dissolution process for special districts if no process exists in law. 

• Gives fiscal courts the power to veto certain tax and fee increases proposed by the district.