Special districts, or single purpose governments, are local governments that exist to provide a single service. As of 2012, there were about 38,000 special districts in the United States. Those don’t include school districts. School districts have a category of their own. Special districts can levy taxes on residents and property owners – typically sales or property tax. Again in 2012, $206 billion was collected from special districts nationwide. Conversely, counties collected $382 billion and municipalities collected $525 billion.
There are a few different kinds of special districts, one being Dependent Districts. These are created by and responsible to another local government. The criteria to be a dependent district is that at least one of the following must be true:
#1: The “Special District” Board has the same members as the City Council/County Commission that created it.
#2: If the city/county that created the district gets to appoint the members of the Special District’s Board
#3: If the city/county that created the district gets to remove the members of the Special District’s Board at will
#4: If the city/county that created the district gets to veto decisions made by the Special District’s Board
Dependent Special Districts may be responsible to the city/county that created them, but they can raise revenue separately from the city/county government. The other type is Independent Special Districts. These are very different from dependent special districts because they meet none of the criteria mentioned above. They are not responsible to another local government. They are typically, but not always, located in unincorporated land. Independent special districts are usually created by the people who live there and not by another local government. Even if they are, that local government has no authority over the special district.
There is another distinction of special districts which is enterprise versus non-enterprise. An enterprise district is a government that raises revenue like a business where users are charged a service fee. Those who use more of the service are charged more. Examples are sewer districts that charge for water and cemetery districts that charge for burial plots. Non-enterprise districts are a government that provide a general service and raise revenue through taxes – usually a property or sales tax.
There are three reasons as to why one would form a special district. One is to pool together resources. When a place lacks resources, they can form a special district to pool their resources together to provide the service. Another reason is to provide services in unincorporated areas. This is for when residents want a service provided but don’t want to form a municipality. The third, is construction and maintenance of capital projects.
Special districts can be subject to increased risk of corruption and inefficiency because there is usually a very low profile with low voter turnout and low awareness. They can also be subject to special interests of private businesses. However, not all special districts are corrupt and some people may live in one and not know it.