Developers can impose their own taxes by MO State auditor Claire McCaskill

St. Louis Post Disptch
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03/18/2006

In Missouri, shopping center developers can impose their own taxes without a by-your-leave from voters or the local city council. Not only that, developers can collect the taxes and allocate the money, too.

This outrageous form of taxation without representation has gotten out of hand. The Legislature should convene a little tea party to discuss the state's Transportation Development District law and give it a thorough democratic scrubbing.

Transportation Development Districts have a legitimate purpose. When a big shopping center opens up, it can tie local traffic in knots. A community needs money to widen roads, put up traffic lights and the like, and a TDD can impose taxes for such improvements in a small geographic area. This usually takes the form of a sales tax on shoppers at the shopping center.

Sometimes several shopping center owners get together to improve a traffic-clogged road with a taxing district. Advertisement

In the old days, developers often ponied up for those expenses; road improvements, landscaping and other amenities were part of pitching woo to the local government. Today, like it or not, shoppers -- and not just the folks who live in the municipality where the shopping center is located -- are paying for the roads they drive in on. The rub here lies in who gets to call the shots, and the lack of openness and accountability of the process.

Under the law now, a developer can draw lines around his own development, then petition the court to establish a tax district. Unless someone actually lives on the property, neither voters nor the local aldermen get a say.

Once the district is set up, the developer names a board to set the tax rate. The developer often collects the money and arranges the road contracts, sometimes without any OK from local officials. The state auditor gets to check the books every three years to see that the money is spent properly.

Missouri has a long history of skepticism toward taxes. Two decades ago, voters approved the Hancock Amendment to the Missouri constitution, guaranteeing their right to vote on major tax hikes.

To surrender that right to private interests flies in the face of the expressed sentiment of the people. Municipal governments or local voters should be given a say, both in the tax rate and how it's spent.

Not that taxes would be much different if municipal governments had such power. Municipal officials love retail sales taxes. That's partly because many shoppers live out of town and can't vote them out of office.

Sales taxes also are popular because they are stealthy and confusing for taxpayers. The state, municipalities, fire districts and assorted others pile on sales taxes, which vary widely from one place to another. But all a shopper sees are dollars added to the bill, with no clue as to whose cut is whose.

That brings us to another problem with the current developer-driven process. The transportation district tax is often lumped in with the total sales tax figure. So taxpayers don't realize that they could skip the tax by shopping a few blocks away.

Certainly, a tax imposed by a developer is in a category of its own, and it ought to be noted on the customer's bill.

Transportation development districts have been sprouting like daffodils since 1997, when the law began allowing developers to start their own districts. There are now 26 in the St. Louis area alone.

State auditor Claire McCaskill has done the public a service with her recent report detailing the anti-democratic problems with transportation development districts. The next move belongs to the Legislature.