THE BUZZ: Ghost Governments

By on October 25, 2016

The mysterious ‘special districts’ that operate in the soft underbelly of conventional government.

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JACKSON HOLE, WY – They can sue and be sued. They can borrow money and acquire debt. They can impose taxes on their citizens but are themselves a tax-exempt entity. They establish laws, provide water/sewer, maintain the streets, and keep the lights on. Sound like town government? Well, kind of.

Special districts are quasi governments—actual political subdivisions of the state—that fly mainly under the radar in miniscule five-point font size under public notices in the local paper. From synthetic cities to makeshift municipalities, many of these special districts are like HOAs on steroids. Across the state they generate $1 billion annually with virtually no transparency or oversight. More than 41 special districts have formed in Teton County alone and that number is growing by the day. Four more have applied only last week.

Special districts can be formed for most anything. Wyoming allows for 28 distinct special districts ranging from hospital and school districts to predatory animal and cemetery districts. The most common in Teton County is the improvement and service district, or ISD.

ISDs are like hyper-homeowners’ associations with the functional power and authority of a micro-government, nested within a county, inside a state. Special districts can be models of democracy in action—a government closest to the people, involving sometimes just a handful of residents. But they also pose inherent problems. Those forming them can easily get overwhelmed by the paperwork involved or simply don’t understand what they are doing. Then there is the potential for abuse.

A new sheriff in town

Paul Vogelheim is a county commissioner assigned by the governor to a taskforce looking into special purpose governments with the idea of creating more oversight.

“I had no idea these districts generated that kind of money with no real accountability,” Vogelheim said. He estimated special districts in Teton County alone generate $140 million.

Along with state senators Cale Case and Chris Rothfuss, and state representatives Dan Kirkbride and Jerry Paxton, Vogelheim and his fellow legislators have drafted four bills that will both educate those forming ISDs, as well as provide more accountability for county and state officials. Word is out after five meetings with the group, and Vogelheim has already heard from ISD board members curious to know what he’s cooking up.

“I feel a little like Simpson-Bowles right now. We’ve done a good job of pissing everybody off,” Vogelheim said of the committee’s early efforts. “State statutes are very complicated on all these 28 different types of special districts. Last year, for instance, Rafter J didn’t even have their election. They forgot. I think there are five or six [special districts] called out by the state Department of Revenue in our county for potential audit. This isn’t a ‘gotcha.’ The board of county commissioners wants to help these guys be successful.”

Vogelheim said the county could extend their board training programs to include ISDs to help them be compliant with state statute by educating them in public meeting laws, elections and proper bookkeeping.

State statute requires special districts to have at least 60 percent of the affected residents in agreement to form. A board of three to five members needs to be elected and put in place. Recordkeeping is also a major challenge.

“Most of them are making sure things are done right. Like those at Teton Village where they have professionals in place like Melissa Turley and their own fire department,” Vogelheim said of the Village’s five different districts. “Others are smaller and volunteer, and they are wading through a lot of paperwork. I’m asking for more training at the formation level so we make sure they understand what they are taking on when they form. This shouldn’t be just a rubber stamp approval.”

Lilliputian electorates

Many neighborhoods find ISDs useful. From Skyline’s ISD, to take on road and sewer challenges, to Indian Paintbrush, where they need water pumped uphill, to Flat Creek’s new coalition, formed to deal with flooding headaches nearly every winter for residents along that tributary—ISDs tackle the little jobs the county just can’t get to.

“At Skyline, one of the county’s original developments, the developer turns the property over to a homeowner’s association, so the property owners there need to get together and keep the roads plowed and maintained, and form their own private water district versus individual wells,” Vogelheim said. “When problems couldn’t get fixed, residents set up a Flat Creek water district under the umbrella of a conservation district trying to address the frazzle ice and flooding. That’s an example of a special need that local government hasn’t been able to deliver on so they are taking matters into their own hands.”

With the relative ease of forming a special district, dozens have popped up in recent years. One in Teton County, in fact, consists solely of a single married couple. “Their board decisions would have to be unanimous I would think,” joked county clerk Sherry Daigle.

While these mini-administrations are an example of smaller government closest to the people taking care of the problems the county doesn’t want to deal with, according to Vogelheim, they also land on the commissioners’ desks when problems arise.

“Take, for example, Game Creek. That’s a wild one,” Vogelheim said. “They are like the Hatfields and McCoys up there. There are two different districts dealing with the roads, keeping them plowed, and maybe there should be just one. We have people coming to the county saying, ‘You have to fix this.’ Sometimes you have these small entities that don’t get along.”

One of the reasons Gov. Matt Mead called together the committee Vogelheim is part of is to give the county some “teeth” in dealing with disputes that occasionally arise with ISDs.

“In the Village, they fund themselves with mill levies, fees, and sales tax. They have the option of adding three mills without their voters even weighing in on it. If people get upset about these things, where are the checks and balances? Where can people complain?

“We’ve heard other stories about counties with irrigation districts where a public meeting is advertised by a note tacked onto the door of Fred’s shack in the middle of his field. Or the Johnson County Wars are still going on. Members have formed a cemetery district there, and say they need to go from one to three mills even though they have a 400-year supply of cemetery space and millions of dollars in reserve.”

Why so special?

So why do these special districts form?

“That’s an easy one,” said county attorney Keith Gingery, who happens to live in an ISD in Rafter J. “You can access grants and loans. To get at state funds you have to be a government entity. If you are just an HOA you can’t get funds. You can also bond as a special district.”

ISDs are eligible for grants and low interest loans when infrastructure needs repair or updating. They can also purchase parts and equipment with tax-exempt status.

“Another good reason to form a special district is it’s a lot easier to collect people’s dues,” Gingery said. “Let’s say it’s just you and another couple of people on a road and you get together every year to hire Evans to come plow. What happens if one guy forgets to pay, or doesn’t want to pay? You don’t want to be the guy who has to deal with that. Up at Game Creek, for example, that is one advantage when it comes to collecting fees. When you pay your property tax there is a line item for Game Creek ISD where you would pay that fee.”

Gingery sees ISDs as an extension of HOAs. He likes how they work and believes special districts to be a unique example of democracy in action. “I live in Rafter J and we have an HOA. They can deal with barking dogs and trash and stuff that an HOA would deal with. ISDs deal with what a small city would do in a much more organized way.” PJH


About Jake Nichols

Jake is a work in progress.

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