Audit finds 'lack of public accountability' with special taxing districts in Missouri

Friday, July 20, 2007

JEFFERSON CITY, Mo. -- A state audit released Thursday finds the number of special taxing districts keeps growing and says there's no way to know whether the money is being used properly.

Auditor Susan Montee took another look at transportation development districts, following up on work by her predecessor.

The districts typically charge special sales taxes at retail businesses within a development to help pay for roads, bridges and other transportation needs to improve that development.

Montee's report finds there were 120 districts through the end of 2006, nearly 70 percent of them in the Kansas City or St. Louis areas. Together, they are expected to collect more than $1 billion in taxes over time.

The audits say taxes are raised without a public vote and little government oversight. Montee says the previous audit recommended various changes in law to improve the process, but that lawmakers have done little to address the concerns.

Generally a project developer asks a court to create a special taxing district and a governing board, which sets the tax to pay off project costs. Customers then must pay a higher tax -- sometimes as much as an extra penny per dollar -- in one store than they might just across the street, without knowing why.

"Our concern with this process is a lack of public accountability or oversight," Montee said Thursday. "This can be a good tool, but you have to have oversight."

Montee's audit focused on 17 such districts created in 2003 or earlier that hadn't been audited before.

She found a variety of problems, such as competitive bids for the work not being done properly or at all; districts charging a higher sales tax rate than authorized; and a lack of documentation proving the right amount was paid to reimburse developers for their costs. In one instance, the developer's costs were counted twice.

The transportation districts, and the taxes that go with them, are expected to last for anywhere from five to 40 years. The first district was created after a change in law in 1997.

Another concern, Montee said, is that someday, project costs could be paid off, but the tax would still be collected, without a way for the state to come in and shut it down.

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