State Auditor Nicole Galloway is calling for increased regulation for Missouri’s transportation development districts.
An audit, released Monday, found a lack of transparency and self-dealing practices by the districts led to $1 billion dollars in tax payer debt.
“Taxpayers don’t even know they are on the hook for this money,” Galloway says. “They’re charged these sales taxes that go to pay off these projects and there is about $1 billion dollars in debt.”
These districts were created to help fund transportation projects by allowing certain communities to raise funds through a one percent increase in a special sales tax. But the tool has morphed into public funding sources for private developers, Galloway says.
“Self-serving” district regulation allowed private developers to create districts, appoint a board, charge sales taxes, award themselves contracts and approve payments, all without public approval. This occurs because the districts can be formed around a single parcel of land or drawn so a boundaries don’t include any voters or any members of the public, according to the audit.
“It isn’t as if citizens voted to be charged these sales taxes, they owe this money but they have never voted to be charged this sales tax. So it boils down to taxation without representation,” Galloway says.
In 1997 the laws were changed to allow micro-districts, making it legal to create a taxing district without any representation.
“The way the laws are set up, all of this is legal and allowed under the law. That is the problem,” Galloway says.
The audit highlighted the Rock Bridge Center TDD which raised approximately $322,000 in both 2014 and 2015. It’s one of 12 districts within Boone County.