Auditor: Taxpayers "on the hook" for $1 billion for unapproved state projects

10 months 2 weeks 21 hours ago Monday, April 10 2017 Apr 10, 2017 Monday, April 10, 2017 10:52:00 AM CDT April 10, 2017 in News
By: Kylie Callura, KOMU 8 Digital Producer

JEFFERSON CITY - Missouri State Auditor Nicole Galloway found taxpayers are paying almost $1 billion in outstanding transportation project costs that will be repaid with sales taxes they did not vote on, according to a report she released Monday

The unapproved costs total an estimated $941 million for about 60 percent of Transportation Development Districts, or TDDs, that requested financial disclosure documents.

Galloway said the audit found that TDDs across the state have little to no oversight or transparency on projects because the existing laws related to the districts are weak. This lack of oversight leads to unapproved project costs that fall on taxpayers in that district, she said.

TDD laws were originally created to help communities with transportation projects but have since morphed into public funding sources for private developers, according to the state auditor's office. 

"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. "It appears as though the General Assembly has legalized self-dealing and conflicts of interest through the Transportation Development District laws. I am calling for a total overhaul of the laws that allow and even encourage this kind of activity."

The report cited multiple violations of noncompliance with state laws by transportation districts. All districts included businesses that violated the law by not notifying customers of sales taxes charged, the report said. It also said 58 percent did not include even one business that followed the guidelines of the customer tax notification law.

The following TDDs in Missouri were reviewed and found to be non-compliant with at least part of the tax notification law:

  • Rock Bridge (Boone County)
  • Harrisonville Market Place A (Cass County)
  • Highway 71/291 Partners in Progress in Harrisonville (Cass County)
  • Stone Ridge in Jefferson City (Cole County)

The report included eight other districts from around the state. 

In addition to the lack of compliance with the customer tax notification law, Galloway found the Department of Revenue failed to adequately monitor district boundaries. Of the 12 districts audited, incorrect boundary lines caused 42 percent of the districts to have sales taxes incorrectly calculated or collected, the report said. 

Galloway said the department did not provide information to taxpayers on taxes paid to the district that were supposed to be for public projects. The report said the department does not disclose how much TDDs receive in tax dollars if they did not have at least seven businesses.

The report concluded that the full amount owed may be much higher than the estimated $941 million and could continue to rise as new TDDs are formed.

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