Missouri must fix Transportation Development taxing districts

My recent audit of Transportation Development taxing districts revealed a system of legalized self-dealing and conflicts of interest with no oversight or transparency.

My recent audit of Transportation Development taxing districts revealed a system of legalized self-dealing and conflicts of interest with no oversight or transparency. Most concerning, we found that taxpayers are on the hook for nearly $1 billion in outstanding project costs to be repaid with sales taxes they did not vote for.

Missouri taxpayers deserve better. That’s why I have called for an overhaul of the laws that allow and encourage this kind of activity.

The Transportation Development Districts (TDD) law was initially created to assist local communities with transportation projects that benefit the public interest, but have morphed into public funding sources for private developers. The majority of the state’s more than 200 TDDs are micro-districts, covering a small number of establishments. They are created and managed by the owners and developers that stand to gain the most from district tax collections.

For instance, the St. Louis Convention Center TDD formed in 2010 with plans to charge sales taxes in the district for 13 years. Four years later the board, which is controlled by the property owner, changed the length of the sales tax to 40 years. Under the law, there is no requirement for a vote of citizens or approval from any outside authority. In fact, districts can form with no end date in sight. Even after projects have been completed and paid for, they can keep collecting your money.

In two different Washington Avenue properties, owners formed TDDs around existing parking lots and other businesses without a public vote. The owners then elected boards, which imposed sales taxes to be charged by businesses in the district. The boards paid sales tax to the owners. The owners also charged fees to the public to park in the spaces. The property owners are earning income from sales taxes, and profiting from charging fees for parking – essentially double-dipping on income from the same parking lot.

We found an estimated $941 million still owed in project costs by the TDDs that submitted financial information to my office. And just a little over half of the TDDs responded. The full amount owed is likely much higher, and continues to rise as new TDDs form.

 I also found that the Department of Revenue doesn’t adequately keep track of district boundaries and retailers do a poor job of notifying customers of the sales tax they charge. Boundaries are difficult to search online. Often consumers can’t make informed choices about where they shop until after they make a purchase and inspect their receipt.

It’s outrageous, and I believe it’s all by design. Insiders have rigged the system to take advantage of Missourians. I’ll work with anyone willing to help me fix this. Let’s get it done.

From The St. Louis American.