(THIS STORY WRITTEN BY ALEX DEROSIER, MISSOURINET CONTRIBUTOR)
Missouri Auditor Nicole Galloway says special sales tax districts have left Missouri taxpayers owing nearly $1 billion on projects they did not directly approve.
An audit released by her office Monday found that transportation development districts, or TDDs, have little to no oversight or transparency, leading to alleged abuses by private developers.
Galloway estimates taxpayers owe $941 million dollars in transportation development projects, and they’ll pay for them with sales taxes imposed by unelected bodies. The audit based this number on financial information provided by around 60 percent of the roughly 200 TDDs in the state. Galloway says the number would be higher if the rest of TDDs were included.
The Department of Revenue collects roughly $70 million a year in sales taxes from TDDs, and then remits the taxes to the development districts.
Transportation development districts are authorized under Missouri Law and are used to help develop infrastructure in business developments, creating independent taxing entities often run by private businesses. In other states, such as Ohio, a public representative must sit on the board of a TDD. In Missouri a board can be formed and run by private developers alone, a fact that Galloway says some businesses have exploited.
In one example cited by the auditor, the Stoneridge TDD, a shopping center in Jefferson City, might have violated state construction contract bidding laws. Stoneridge is located near heavily-traveled Missouri Boulevard.
“The board awarded a $2 million construction contract to a company owned by members of their own board, even though the bid was submitted after the bidding deadline,” Galloway said.
She explains that a competing bid was submitted on time, and it addressed specifications of the project more closely than the contractor to which it was awarded. “If that’s not self-dealing, I don’t know what is,” she said.
The audit identified other issues as well.
Galloway said at least one business in each TDD she reviewed failed to report the additional sales taxes they charged to customers – a direct violation of state law. Businesses can be fined, but enforcing the law can be tough.
Another major issue the audit identified with TDDs is the lack of cut-off dates. In 2010, a TDD for the St. Louis Convention Center Hotel originally set out to impose a district sales tax of 1 cent for 13 years. Four years later, the TDD bumped that up to 40 years. Again, voters had no say in the matter.
In light of the audit’s findings, Galloway is calling on Missouri lawmakers to change TDD laws to encourage transparency.
“After a thorough review, it appears as though the General Assembly has legalized self-dealing and conflicts of interest through these transportation development district laws,” she tells the Capitol Press Corps. “I am calling for an overhaul of the laws that allow and even encourage this kind of activity – Missouri residents and taxpayers deserve better.”