PROVIDENCE – On Tuesday, May 14, the Rhode Island Public Expenditure Council (RIPEC) will release comments on the organization and operation of special districts in Rhode Island. As on the most recent Census, there were 91 special districts in the state, 44 of which were fire districts. Although these districts perform valuable services, recent events indicate that additional oversight may be merited in order to promote greater accountability, transparency and equity. The full report is available here.
Bringing special districts under closer control of state government, and applying some of the regulations and restrictions that municipal governments are subject to, may help address these issues. For example, an analysis of the state’s fire districts indicates that four of the 18 districts that have classification systems have a variance between classes of property greater than that allowed by state law for municipalities. Similarly, while the growth in municipal levies is capped by state law, roughly 60 percent of the state’s fire districts have exceeded this cap at least once in the past three fiscal years.
Although special districts frequently act either in place of, or as complements to, municipal services, they are not subject to the same laws and regulations that apply to cities and towns. It appears that Rhode Island special districts – even those with taxation authority – do not report to the Auditor General or any other fiscal reporting agency.
A 2008 report from The Governmental Accounting Standards Board (GASB) estimated that special districts across the country have the lowest rate of compliance with US Generally Accepted Accounting Principles (GAAP) among all state and local governments. Specifically in the case of fire districts – many of which also have pension and other long-term obligations – additional fiscal controls and reporting requirements may help increase accountability and transparency.
Similarly, there is little centralized oversight of these districts. In some cases, such as tourism or conservation districts, which are funded through alternative means, there may exist adequate controls. However, in districts with taxing authority, oversight and reporting requirements similar to those of municipal governments may help protect taxpayers. Consideration to bringing fire districts under the purview of the Division of Municipal Finance, subject to the same controls as municipalities, might both enhance taxpayer equity and provide for early identification of potential problems.