BLEDSOE'S PROPOSAL LOWERING COSTS AND CUTTING RED TAPE FOR SMALL CITIES APPROVED BY SENATE COMMITTEE

BLEDSOE'S PROPOSAL LOWERING COSTS AND CUTTING RED TAPE FOR SMALL CITIES APPROVED BY SENATE COMMITTEE

FRANKFORT, Ky. (Feb. 25, 2026) — The Senate State and Local Government Committee has approved Senate Bill (SB) 192, legislation sponsored by Sen. Amanda Mays Bledsoe, R-Lexington, that modernizes financial reporting requirements for Kentucky’s smaller cities while strengthening transparency and accountability.

SB 192 updates outdated one-size-fits-all mandates that require small municipalities to follow complex accounting standards designed for much larger governments.

Under current law, many smaller cities are subject to complex audit requirements designed for much larger governments. Bledsoe told the committee the existing approach has become increasingly costly, particularly as the number of certified public accountants available to perform municipal audit work has declined in recent years.

Bledsoe’s SB 192 allows cities receiving or expending less than $15 million annually from all sources to complete an agreed-upon procedures engagement in certain circumstances, performed by a certified public accountant or the Auditor of Public Accounts.To qualify, a city must not have been subject to a special examination in the prior fiscal year or the year to be audited and must not be required by state or federal law to undergo a more stringent audit.

Like traditional audits, agreed-upon procedures engagements must be completed and presented to the city’s legislative body by March 1, submitted to the Department for Local Government (DLG) by April 1 and published publicly. The measure also requires cities to publish a budget-to-actual comparison for the general fund and submit reports to the Auditor of Public Accounts.

As Senate Budget vice chair and a former member of the Lexington-Fayette Urban County Council, Bledsoe said she understands the pressure state mandates place on small communities.

“Taxpayers expect accountability, but they also expect common sense,” Bledsoe said. “When small cities divert limited resources to comply with rules designed for much larger governments, that money comes straight out of essential services. This bill protects transparency while giving local officials the flexibility to meet standards in a way that fits the size of their community and respects taxpayer resources.”

SB 192 establishes guardrails for agreed-upon procedures engagements, requires adherence to professional standards and maintains public reporting requirements. The bill authorizes the Auditor of Public Accounts to establish additional criteria through administrative regulation and allows DLG to step in when a city falls behind on required audits. It also includes a “catch-up” provision allowing cities more than two years behind on required audits or financial statements to regain compliance through an agreed-upon procedures engagement, subject to oversight by DLG.

Committee members voiced support for the bill.

Sen. Greg Elkins, R-Winchester and committee vice chair, called the legislation “long overdue” and said it would help smaller cities better manage accounting and audit costs while maintaining necessary oversight.

Senate Majority Caucus Chair Robby Mills, R-Henderson, also expressed support for the measure, noting his familiarity with municipal finance matters and emphasizing the importance of practical solutions for city governments.

The bill reflects collaboration and support from the Auditor of Public Accounts, the Kentucky League of Cities and the Kentucky Society of Certified Public Accountants.

SB 192, as amended by committee substitute, passed the Senate State and Local Government Committee and now advances to the full Senate for consideration during the 2026 Regular Session. Click here to find SB 192 in full.