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State gets top grade for fiscal transparency

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New law to boost accoutability, likely won't impace local tax districts

By Calen McKinney

State and local officials have received praise for being open with residents about how their tax dollars are spent.

And Gov. Steve Beshear recently signed a bill into law to further improve the state's transparency.

Local officials, however, believe the bill won't impact them much, as they are already doing what the law will require.

U.S. PIRG Education Fund conducts research to educate the public about issues to protect residents and promote good government practices. Their recent study shows that Kentucky government officials do just that.

The state received an "A-" on a grading scale of "A" to "F" for its website, www.opendoor.ky.gov, which allows residents to review government spending and revenue and see salaries for government officials.

U.S. PIRG Education Fund's study ranks each state in the United States on how they provide online access to government spending data.

Kentucky is one of the top states for transparency, according to the report, along with Texas, Massachusetts, Florida, Illinois, Michigan and Oklahoma.

Five states earned "F" grades, including Wyoming, Wisconsin, Hawaii, California and North Dakota.

According to a news release from Beshear's office, the state received 92 out of 100 possible points. The release states that the report evaluates contracts, expenses, grants, tax credits and budgets.

Beshear said Kentucky's online system, OpenDoor, is a bipartisan, multi-agency effort to provide a more transparent and accountable state government. It also allows viewers to find out exactly how tax dollars are being spent.

"State government must be accountable to the citizens of Kentucky," Beshear stated in the release. "It is imperative that we provide detailed information on how much state government spends on goods and services and with what companies or entities we are doing business. I am glad we are recognized as a leading state and have been since 2010."

The release states that the report praises Kentucky for eliminating an estimated 40 percent of administrative costs but the state could reduce costs associated with open records requests by as much as 10 percent.

To help make state government even more transparent, Beshear signed House Bill 1 on March 21, a measure that calls for "special" districts in the state to file paperwork to show taxpayers exactly how the districts use their money.

The bill was filed after State Auditor Adam Edelen did an audit last year to survey how the "special" districts operate. The report found that the majority of Taylor County's are compliant with state regulations.

In its report, Edelen's office identified more than 1,200 special districts, which are unelected entities such as libraries, sanitation districts and public health departments that have the ability to fee and tax, but Edelen says some operate with little oversight and accountability.

State law defines special districts as agencies with less than statewide power organized to perform governmental functions within limited boundaries. It includes all political subdivisions of the state except a city, county or school district.

Most special districts have the ability to levy taxes or assess fees, which allows them to provide services to communities.

According to Edelen's audit, there are 11 special districts in Taylor County, ones for emergency services, the health department, the library and more. Of the 11, three had instances of noncompliance.

The 11 special districts are Campbellsville/Taylor County EMS, Taylor County Conservation, Campbellsville/Taylor County Industrial Development Authority, Taylor County Extension District, Taylor County Health Department, Taylor County Air Board, Taylor County Hospital, Taylor County Hospital District, Taylor County Public Library, Taylor County Solid Waste and Taylor County Tourist Commission.

The air board and health department failed to submit budgets to Edelen's study and, as such, were listed as partially noncompliant. The budgets have since been submitted.

Taylor County Hospital was listed as noncompliant with Edelen's study, though Taylor Regional Hospital CEO Jane Wheatley said that's because the district doesn't exist anymore.

House Bill 1 calls for the creation of an online registry for special districts to publicly disclose their budgets and other information.

It also calls for the districts to submit their budgets to fiscal courts. The districts that levy taxes and want to increase their rate will now be required to have a public hearing about the requested increase before a fiscal court meeting.

Representatives from the extension and hospital districts say they already do this, however, and don't expect many changes as a result of the new law.

A representative from the health department districts couldn't be reached by press time to comment.

Taxes account for a very small part of TRH's budget, Wheatley said. Nevertheless, she said, the district files an audit every year that spells out exactly how that tax money is used. She said that money can only be used for building and capital projects.

Wheatley said the hospital's budget is submitted to Taylor County Judge/Executive Eddie Rogers' office.

Though it won't impact her hospital much, Wheatley says the new law is a good one and will help residents see that their tax dollars are being used properly.

"That's our obligation," she said. "If we are entrusted with taxpayer's money, we should be responsible for how they are being spent."

Wheatley said the hospital has always chosen to take a compensating tax rate, which is a rate set to collect the same amount of revenue as the previous year. The rate can increase or decrease, depending on property values.

As such, Wheatley said, the hospital never has to have a hearing for comment on its tax rate. If the hospital ever chooses to set a higher tax rate, she said, a hearing would be scheduled.

Becky Nash and Pat Hardesty, extension agents for family and consumer sciences and agriculture and natural resources, respectively, say the law won't impact the extension district much.

Nash said the University of Kentucky, which oversees cooperative extension offices in the state, already has regulations in place that make each district transparent and follow all state laws.

"We know what the KRSs say about our district and we comply with these fully," Nash said.

She said there are boards in place to oversee how extension districts use tax revenue and ensure that is done legally and morally.

Hardesty said he sees just one impact the new law will have on the extension district.

"It will create a little more paperwork," he said. "A little more documentation. It'll just be something else we have to do during the day. We're not up in arms about it.

"We always have tried to follow all the guidelines to be fiscally responsible."

Hardesty, who serves as fiscal coordinator for Taylor County's district board, says extension financial records are available through open records requests.

However, he said, the office has one day each year in which office staff have financial records open and available for the public to browse through and examine in detail, if they like.

Hardesty said the extension district has an audit of its finances each year, though that is only required every four years. He said board members agreed that they want to ensure any problems are caught and fixed as soon as possible.

In her years at the extension office, Nash said, the district has chosen the compensating tax rate every year but three. In those years, she said, the district chose a rate that would increase revenue by 4 percent, which is allowable by law and isn't subject to a public hearing or voter recall.

Taylor County Public Library Director Julia Turpin said the new law reclassifies the library as a special purpose governmental entity and sets a $500 annual fee to file annual financial reports.

She said the library already does the law's other requirements, from submitting budgets to providing financial summaries and more.

"State Auditor Adam Edelen's report on special taxing districts, which inspired [and] led to the new law, calls Kentucky's public libraries the model for special taxing districts," she said. "HB 1 seems to draw from many the reporting requirements public libraries have followed for years. We have always taken it a step further by also reporting to the Kentucky Department for Libraries and Archives."

Nash said she believes in the new law.

"This is public money. It's my money. It's your money. It ought to be all transparent," she said.

Hardesty agrees.

"Well, I see nothing wrong with having transparency for governmental entities."

He said he believes some of the problems found in Edelen's audit were because some officials simply didn't understand the requirements of special districts.

Turpin said she hoped the new law would streamline some reporting and not simply require more reports, though, overall, she is pleased with the new legislation because some districts weren't reporting their data appropriately.

"I'm glad the bill preserves the financial independence of special taxing districts so that they may continue to operate under a clear and apolitical mission, while creating an accessible place for folks to see where their tax dollars are going."

Taylor County Treasurer Melissa Williams said the special districts in Taylor County are required to submit their budgets to Rogers' office.

The new law, she said, will require that those budgets be sent directly to the state's Department for Local Government and then posted online.