Year of Publication



Martin School of Public Policy and Administration

Date Available


Degree Name

Master of Public Financial Management

Committee Chair

Dr. Iuliia Shybalkina

Executive Summary

Special districts are forms of government that were initially developed from the need to provide specialized services to a growing population with limited tax abilities. Local governments were faced with increasing populations and increasing needs such as health and human services, conservation, sanitation and water, and fire protection to name a few. With the states’ limitations on the tax rate changes, local governments were finding it increasingly difficult to meet the needs of the taxpayers. In many states, legislators recognized this issue and allowed single purpose government-like entities to be created and if they qualified, gave them taxing power. Despite being public entities that provide public services, many special districts are unknown to the taxpayers, and many do business without the constraints of government budget rules or spending transparency (Cross, 2017). Regardless of a special district’s legislative origin or the services provided, its budget is not reviewed by the legislature and its spending and debt are not reported as part of other government budgets. “The potential for special districts to be used to evade normal forms of governance and established fiscal limitations makes transparency and accountability in their spending and operations particularly important” (Cross, 2017 para 5). In recent years, states have started to bring to light the issue of special districts’ (some of which have taxing power) oversight and accountability to minimize the tax stress they are placing on local taxpayers as the fastest growing form of local government. Texas, Illinois, and Kentucky have all taken steps to improve transparency and in the 2020 legislative session, Kentucky took steps to address oversight in passing Kentucky Revised Statute 65A.110. This paper addresses the most current status of special districts, most notably, those with taxing powers, in ten different states and what transparency, oversight, and accountability measures are in place to ensure these entities are taxing and spending responsibly. As well, it highlights the state of Kentucky and makes recommendations for both administrative and legislative oversight of special districts for better accountability to the taxpayers resulting in specific “best practices” for state governments to consider.



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