A bill strengthening financial reporting requirements for Kentucky’s 1,200 special taxing districts is headed to the desk of Gov. Steve Beshear.

Based in part on recommendations of the state auditor, the bill sponsored by House Speaker Greg Stumbo, D-Prestonsburg, would create an online public registry with the taxing district’s annual budgets and other information increasing public access to the information. Many districts are authorized to issue bonds.

The website would be maintained by the Department for Local Government.

Supporters of the measure said it would add accountability to special taxing districts and help taxpayers know how public money is being spent.

Special taxing districts include public library boards, fire departments, and water and sewer districts. They are found in 117 of Kentucky’s 120 counties and spend more than $2.7 billion annually.

The bill sets ethics and education standards for taxing districts, and stiffens penalties if they do not comply with auditing and reporting standards.

The districts would also be required to submit a budget report to their local fiscal court. If a new fee or increased tax rate is proposed, a district would be required to hold a public meeting prior to the change.

Beshear has indicated that he will sign the bill. Kentucky auditor Adam Edelen proposed the legislation after conducting a six-month examination of special districts last year, which resulted in a publication called “Ghost Government: A Report on Special Districts in Kentucky.”

Edelen also created a database of his findings, which includes financial reporting lapses by some districts. His office discovered that special districts collect $1.5 billion in taxes and fees annually, and another $1 billion from grants, corporate sponsorships, and fundraising.

In all but three counties, taxpayers pay more property taxes to special districts than to county governments. The districts also have another $1.3 billion in reserves, twice the amount held by the state’s 174 school districts.

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