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Fiscal court questions local ‘special districts’



Three years after the Kentucky General Assembly passed a law to bring more transparency to Kentucky’s special taxing districts, the Letcher County Fiscal Court is expressing its own concerns about how the districts — and their boards of directors — operate.

The Letcher County Health District, the Letcher County Public Library District, the Letcher County Extension Service, and the Letcher County Soil Conservation District are among the special taxing districts here. They became the subject of controversy at the fiscal court’s June meeting this week when District Two Magistrate Terry Adams challenged the authority of the districts’ boards of directors to levy taxes without answering to the public or to the fiscal court.

Adams told his fellow court members that the taxing districts seem to set their own tax rates at will, adding that he would like to require respective board members to appear at court meetings to explain their reasoning behind the tax rates they set.

Letcher County Judge/ Executive Jim Ward said the court could ask the districts to send board members or other representatives to fiscal court meetings to explain the tax rates. However, Ward said that before the court attempts to require anything of the districts the matter would need to be looked at in depth.

Adams said the fiscal court doesn’t really get a large portion of county taxes anyway and that the special districts get a significant amount. He said it is his opinion that the process and reasoning the districts use to decide on their tax rates should be more transparent, with the public having an opportunity to see how and why the tax rates are set.

In 2013, then-Gov. Steve Beshear signed into law a bill passed by the state House and state Senate that has made the special taxing districts more accountable to taxpayers. The bill was approved at the request of then-Auditor Adam Edelen, whose office had conducted a series of special district audits. At the time, Edelen said there were 1,200 special districts in Kentucky that collect a total of $1.5 billion in taxes and fees annually.

The bill was known as House Bill 1 and was sponsored by House Speaker Greg Stumbo, a Prestonsburg Democrat. The threeyear old law now requires libraries, health departments, extension services, soil conservation offices and other special districts to submit their annual budgets to an online registry operated by the state Department for Local Government’s Special Purpose Government Entities Branch. The new law also requires special districts to submit budgets, undergo audits, adopt a code of ethics, and publish an annual financial statement.

Adams called into question how board members are appointed to special taxing districts. Ward explained that while the fiscal court does appoint some members, others are appointed by the state or the governing bodies for the specific district.

Letcher County Attorney Jamie Hatton told the court he is interested in how special districts work and had been hoping to take a closer look. He said he isn’t sure what authority the court or any other body has over the districts, but believes it would be good to find out.

Adams said if he finds that any of the districts has a large surplus when it comes before the court for what in the past has been a ceremonial vote of approval for its tax rates and budgets, he would not give his approval.

The discussion came up after magistrates were called upon to fill a fiscal courtappointed vacancy on the county library board. The court voted unanimously to appoint Whitesburg physician Marlene Bielecki to fill the vacancy that will be created when the term of Carl Banks expires on June 30.

In other business, the court voted to refinance the loan for the Letcher County Recreation Center at a lower interest rate that would save the county at least $688,000 over the life of the loan. Kelly Mittler, leasing officer with the Kentucky Association of Counties, which holds the loan, and R.J. Palmer II, a former state representative who is a financial advisor with Lexington based Civic Finance Advisors, approached the court and suggested that the loan be restructured. Palmer told the court that by refinancing at a lower interest rate — made possible by the improved economy since the original loan was obtained — the county can save about $28,500 a year.

In an answer to concerns from District Five Magistrate Wayne Fleming, they said the interest rate of the loan will be locked in at the rate set at the time it is refi- nanced. The court will meet in special session Thursday to vote on an ordinance to refinance the loan and to conduct the second reading of the county’s 2016-17 operating budget.

In a matter related to the county’s 2015-16 operating budget, which expires June 30, Ward asked County Treasurer Phillip Hampton, “Are we going to squeak by this year?”

“Yes, we are,” said Hampton, who cautioned the court that most of the bank balances that are on the month’s financial report will be “wiped out” when bills are paid by July 1.

Those balances as of June 15 were:

General Fund — $473,704

Road and Bridge Fund — $328,648

Jail Fund — $31,144

LGEA Fund — $383,003

Senior Citizens Fund — $79,527

Forestry Fund — $16,508

Letcher County Public Courthouse Corp. Funded Depreciation Reserve Account — $178,004

Letcher County Public Courthouse Corp. Debt Service — $64,072

The court also voted unanimously to enter into the County Road Aid Cooperative Program agreement with the Kentucky Transportation Cabinet to allow for the state to finance the repaving of certain roads in Letcher County. The overall allocation is for $1,165,124, with an initial distribution of $678,102 followed by two smaller distributions.



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