Missouri State Auditor Nicole Galloway was in St. Louis Thursday to present her report on more than 400 Community Improvement Districts around the state.
The first-ever audit of the special tax districts, better known as CIDs, found a general lack of accountability and failure to comply with state laws regarding budget preparation, annual financial and performance reporting, annual meetings and the Sunshine Law.
The state legislature approved the use of the special tax districts in 1998 as an economic development tool. They allow developers or businesses in a specific neighborhood, like Downtown or the Central West End, to collect a sales or property tax of up to 1 percent.
The CID tax revenue is required to be spent on projects that range from new construction and security to landscaping and events.
Even though there are more than 400 CIDs in Missouri, Galloway said at a news conference that many taxpayers are unaware of the districts or the additional tax, as most districts don’t require voters to weigh in.
“When sales taxes are charged to citizens that they don’t know they are paying and they did not vote on, someone needs to have their back and scrutinize these projects,” Galloway said.
Galloway, a Democrat, was appointed state auditor in 2015 by then-Gov. Jay Nixon. She is seeking election to the office this year.
St. Louis has 128 CIDs that generate $700 million in taxes to pay for special projects in the districts. The auditor’s report estimates that CIDs collect $2.2 billion in tax revenue state-wide. The boards that oversee the spending of CID sales taxes are often controlled by developers who stand to benefit, according to the report.
“There is lack of transparency about how money is being spent,” Galloway said about the audit’s findings. “And there’s no assurance that those public dollars are being used in the public’s best interest.”
Galloway is calling for a change in the law pertaining to CIDs to require more oversight and accountability.
“The laws need to change so when municipalities set up these CIDs to begin with,they are assuring these projects are in the public’s best interest,” Galloway said.
In addition to more scrutiny, Galloway said limits on the lifetime of CIDs should be considered. Currently, CIDs can impose taxes in perpetuity, and many have been found to collect taxes after improvement projects are completed.
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