Many transportation development districts across Missouri often have little oversight or transparency, amassing nearly $1 billion in project costs unapproved by taxpayers, Missouri's state auditor said Monday in calling for stricter laws governing such districts.
State Auditor Nicole Galloway said her office found that such project costs are to be repaid with sales taxes without taxpayer consent.
Galloway added that laws applying to the districts initially were designed to help local communities with transportation projects that were publicly beneficial. But she said they have morphed into public funding sources for private developers. Most districts are created and managed by the owners and developers who stand to gain most from the districts' tax collections, creating a conflict of interest, Galloway said she found.
"Insiders have rigged the system to take advantage of Missourians. It is outrageous that taxpayers are on the hook for a billion dollars in debt without even realizing it," Galloway said in a statement. "I am calling for a total overhaul of the laws that allow and even encourage this kind of activity."
Galloway said that transportation development district projects at times use lease agreements so the collected taxes are channeled to the property owner, who also may be the developer. The owners are not required to use the property for public benefit.
All 12 of the districts that the auditor's office did an in-depth examination of included at least one business that illegally didn't notify customers of sales taxes charged, Galloway said, adding that the Missouri Department of Revenue fails to adequately monitor or track district boundaries.