Special districts play a key role in providing specialized services within communities, from water management to public transportation.
Understanding how special districts secure their funding is key to grasping their role in maintaining vital infrastructure and community needs.
Read on to learn about the different financial mechanisms that sustain special districts, from taxes and fees to bonds and grants. You’ll also discover how meeting management software helps municipalities streamline communication, enhance collaboration, and govern more effectively.
What is a Special District?
A special district is a type of government entity created to provide specific services within a defined geographic area. Cities, towns, and counties in the U.S. rely on special districts for essential services such as water, fire protection, and infrastructure.
Special districts have significant financial and administrative autonomy. They’re created to serve a particular purpose but are dissolved at the end of a fiscal year unless the district reapproves the special district for the following year.
Special districts cover a wide range of services, including libraries, parks and rec facilities, hospitals, soil and water conservation, and the airport authority.
Why are Special Districts Created?
When community members have a need for a certain service or facility, they’ll petition the appropriate council or commission to create a special district specifically to meet that need. A special district can be established through a city ordinance or city code, but the process typically depends on state laws, which govern the creation and operation of special districts.
After being approved, a board of directors is typically elected and the district functions as a hybrid public-private partnership, as the board is accountable to the constituents within the geographical boundaries and not the entire community.
The city clerk and district attorney play a crucial administrative and procedural role in the process of passing a special district, particularly in ensuring that legal requirements and public transparency are met.
A key benefit of a special district is that only the users pay for it. They’re also more responsive to community needs as the district serves one purpose.
On the downside, the creation of special districts can lead to a fragmentation of government services, with multiple overlapping jurisdictions. This can result in inefficiencies, duplication of services, and complications in coordination between districts and other local government entities.
How Are Special Districts Funded?
Like any other quasi-government entity, special districts are financed via a combination of user fees, taxes, and public or private grants. Some agencies, such as fire protection and emergency services, receive funding primarily through property taxes. Water and sewer agencies typically rely on user fees.
Property Taxes
Local governments often raise property taxes to pay for special districts. Some municipalities levy hospitality taxes on users — a popular revenue source in urban or resort areas with high tourism.
Service Fees
Public services and utilities typically charge constituents for their services. Besides the essentials, those services include trash removal, landfills, and other services with a broad range of consumer engagement.
Special assessments may be charged to users following emergencies that deplete resources, or to increase reserves ahead of natural disasters.
Sales Taxes
Some states and municipalities allow a portion of the sales tax to fund special projects. Consider a sports stadium, for example, as not everyone will use it.
Bonds
From time to time, a special district needs funding far beyond the revenues they collect through taxes and fees. For instance, when a wastewater treatment plant needs replacement, municipalities may borrow funds to pay for the large expense. The special district residents may vote to issue bonds to the general public to raise the money without relying on outside sources.
Grants
Federal and state grants are available to special districts that are critical to public infrastructure. Rural and underserved areas may be eligible for USDA, EPA, or Transportation Department grants that offset the lack of an affluent tax base.
Getting Started With eScribe
Put simply: Special districts provide municipalities with a mechanism to deliver essential services while navigating financial, political, and administrative challenges.
eScribe’s cloud-based meeting management software helps public sector organizations streamline meeting management, automate meeting administration, improve transparency, and enhance compliance with regulatory requirements.
Key eScribe features include:
- Public Engagement Tools
- Agenda Management
- Meeting Minutes and Tracking
- Live Meeting Support
- Document and Content Management
- Voting and Collaboration Tools
Ready to learn more? Check out how the City of Greensboro, NC, uses eScribe to enhance citizen engagement while streamlining the management of local meetings.
