Special districts operate outside local governments to offer a single, focused service. That “makes it all the more noticeable when things go wrong.”

John Oliver is making a career out of his extended tear-downs of American local governments at their worst, and Sunday night’s Last Week Tonight investigation featured another excellent entry. With equal parts outrage, pity, and absurdist cheer, Oliver took down special districts—local-level government agencies, separate from cities or counties, charged with delivering focused services (water, sewers, fire, parks, mosquito abatement) within a specific geographical boundary.

According to Oliver, the U.S. spends about $100 billion on these agencies, which already number nearly 40,000 nationwide and are increasing at a steady clip. Many are “chugging along just fine, with no major problems,” Oliver said, and many make good sense—for example, sometimes small cities or towns create a joint district, in order to share costs and deliver a particular service more efficiently.

But because many special districts are formed and operated largely outside of local governance structures, with inconsistent oversight (hence their occasional nickname, “ghost governments”), many citizens are unaware that they’re paying into them when they fork over their property taxes—and likewise unaware of the astonishing incompetence with which large sums of public money are sometimes handled.

Oliver offers many examples: The volunteer fire department in Kentucky that misspent $100,000 on flat-screen TVs, chewing tobacco, and fireworks. The neighbors in Phoenix paying a $993 difference on their water bills because they belonged to different water districts. And there was the Texas utilities district that’s been billing its customers for the exact same amount of water—13,721,000 gallonsyear after year after year. “When special districts only have one job, it makes it all the more noticeable when things go wrong,” Oliver said.

What’s behind the rise of special districts, and how can poorly managed ones be reined in? States often limit local government’s abilities to raise and hold onto taxes, and since the recession, the amount of aid states have provided to cities has dropped precipitously. And the tax bases of many cities are in decline—so visibly in Flint— leaving cities with less cash to cover necessary services. Special districts allow localities to dedicate funds for stuff they might not otherwise be able to afford—not necessarily a bad thing, but the government fragmentation and lack of transparency can lead to costly outcomes. Between state and local governments, the need to reform revenue sharing is clear.

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