State Auditor Adam Edelen faces a formidable challenge as he sets out to review and catalog Kentucky’s 1,300 to 1,800 special districts so taxpayers can judge for themselves whether the authorities operate in the public’s best interest.
Where this trail will end is hard to predict. Other agencies loosely connected to government have come under closer scrutiny in recent years, largely because of a series of investigative reports by the Lexington Herald-Leader. Through public records requests and followup inquiries, the newspaper turned up a scandalous trove of inside information about organizations like the Kentucky League of Cities, the Kentucky Association of Counties and Lexington’s airport and library boards. Such groups formerly received little public attention, and members had become accustomed to transacting business without many questions from nosy reporters.
The paper’s stories were eye-opening. At a time when the recession was deepening and most workers had to subsist with little if any hope for rising income, the League of Cities director was making $315,000, having had her salary raised 25 percent over three years. The League provided her a BMW to drive and employees ran up almost half a million dollars in travel expenses one year. The executive director of the Kentucky Association of Counties, based in Frankfort, also got to ride around in a BMW and had an employer-paid country club membership. The credit card account of one board member listed nearly $20,000 in expenses in 2008, including payments to a Lexington strip joint and an escort service.
Will the auditor’s examination of special districts turn up similar abuses? Who knows? Newspapers typically do not cover routine meetings of special boards and even some government insiders may have scant insight into their workings. As Edelen put it, “This is a huge layer of government that is operating not just in the shadows, but in the pitch black dark.”
Groups like KLC and KACo get their cash in dues paid by city and county affiliates. They don’t levy taxes, they just share indirectly in the proceeds. Some special districts do have the power to tax, and their statewide take is put at $500 million to $1.5 billion a year, according to the auditor. That’s a lot of money to spread around with little oversight on behalf of the taxpayers.
Franklin County districts with taxing powers administer the soil conservation service, cooperative extension, the health department and the Paul Sawyier Library. Some other districts levy no taxes but do bill their customers for services. County water districts – Elkhorn, Peaks Mill and Farmdale – buy water wholesale from the Frankfort Plant Board and retail it to residents. Farmdale has spun off a sanitation board that’s trying to extend public sewers in its territory.
Edelen isn’t accusing anyone of wrongdoing at this point. To the contrary, he says boards of directors for libraries, fire departments and water/sewer service meet public needs, but they should be held accountable. The auditor plans to propose legislation governing districts next year.
The light of day can be good for the soul. The League of Cities and the Association of Counties cleaned house after their own indiscretions were exposed and now both support Edelen’s examination of special districts. Public-service agencies should get used to more public review.