Auditor: Missouri’s taxing district law allows unethical practices, poor oversight

Courtesy of Nicole Galloway/LinkedIn

Transportation development taxing districts in Missouri are riddled with conflicts of interest and have no oversight to prevent self-dealing, state Auditor Nicole Galloway said Monday.

Many of them also appear to be in violation of state law when it comes to businesses failing to notify the public of special sales taxes being collected, said Galloway, who also noted that “a lot of this isn’t illegal, but…should be.”

Transportation development districts are one of several types of special taxing districts that have become increasingly popular across Missouri. Activist and research groups have for years been calling for reforms to TDDs as well as community improvement districts — also known as CIDs — and tax-increment financing.

The conflicts of interest with TDDs generally involve district board members being allowed to vote to award themselves contracts for construction development, as well as approving the payments of those contracts. The law does not require the districts to put such contracts out to bid publicly.

Galloway said transportation development districts are the only such political subdivisions in the state in which these conflicts of interest aren’t prohibited by state law.

More than 100 districts out of 205 responded to an auditor’s request for documents for this study, Galloway said. In each of them, at least one business collecting the special sales tax did not provide information to customers that the tax was being charged.

Read more: St. Louis Post-Dispatch, St. Louis Public Radio

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