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Legislation would clamp down on TDDs

But bill has its opponents, including Columbia attorney who calls it 'goofy'
Wednesday, May 27, 2009 | 12:01 a.m. CDT

COLUMBIA — Buried within the Missouri General Assembly’s 33,000-word economic development bill, which passed on the final day of the legislative session, are a few paragraphs amending Missouri’s law governing transportation development districts, also known as TDDs.

Sometimes called the jobs bill, the legislation is a bipartisan attempt to boost the state economy with targeted tax incentives and job training programs while updating some of the statutes governing Missouri’s tax credits and tax districts.

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The bill contains four provisions regarding TDDs. It would:

  • Require that all TDD sales taxes be collected by the Missouri Department of Revenue.
  • Impose a fine of $500 per day if TDD administrators fail to submit annual financial reports to the state auditor.
  • Require that the judge creating the districts order a public hearing.
  • Make the districts estimate their spending on road projects and land acquisition.

“My initial reaction is that most of these make some sense,” said Robert Klahr, a St. Louis attorney who represents TDDs around the state, including two in Columbia.

The bill's sponsor, Rep. Tim Flook, R-Liberty, said Gov. Jay Nixon’s staff was involved in crafting the bill during the session and expects the governor to sign it. Nixon has highlighted the bill as one of the accomplishments of the legislative session and will receive it on Friday, spokesman Scott Holste said. The governor has 45 days from the time he receives a bill to veto or sign it.

Flook, who has been working on some provisions in the bill for a couple years, said that it is intended not only to create jobs but also to enact “solid reform” on tax programs such as TDDs, tax-increment financing and historic preservation credits.

“We wanted to make sure Missouri did not make the same mistakes other states have and allow its programs to become corporate welfare,” he said.

The amendments address some of the concerns outlined in State Auditor Susan Montee’s October 2008 report on TDDs around the state. Those concerns, and the general accountability of TDDs, were the subject of a three-part series published by the Missourian in April and early May.

“We’re very encouraged by all this,” said Allison Bruns, director of communication at the auditor’s office.

The auditor’s office had recommended that the Department of Revenue collect TDD sales tax and that districts be required to submit more detailed spending estimates, among other things.

“It’s just more accountability,” Bruns said.

But Craig Van Matre, a local attorney whose firm manages seven TDDs in Columbia, is not quite as enamored of the bill.

“That legislation is goofy,” he said. “I think an eighth-grader could have written a better bill.”

Retailers in districts he manages now must send the TDD sales tax they collect to the understaffed Department of Revenue, rather than the city, like they do now, Van Matre said. He added that the language imposing a $500-per-day fine on districts that fail to submit annual financial reports in a “timely” manner is too broadly worded and just adds more work to an already enormous bureaucracy.

“It doesn’t seem like a very good use of everyone’s time,” Van Matre said. “But apparently it satisfied some legislator along the way that he was doing some good for humanity.”

But some TDDs collect the TDD sales tax themselves. Stadium Corridor, established by the late developer Raul Walters, collects its own sales tax and keeps it in a lock box. Under Flook’s bill, Stadium Corridor’s revenue would have to go through the state. Craig Davis, the district’s attorney, said the legislation shouldn’t be much of a burden on the district because it works similarly to a community improvement district.

Klahr said that in the past, the revenue department position was that it could not collect sales taxes for each TDD because it lacked adequate records or staff.

Department spokesman Ted Farnen said in an e-mail that the new requirements would have an administrative effect, but that it is unclear how significant it would be.

Farnen said that if the bill becomes law, the department would make information available on its Web site concerning TDD tax collection.

Klahr also finds it odd that the legislature would explicitly impose a penalty on TDDs for failing to file financial reports. Every political subdivision is required to submit a financial report to the auditor’s office every year, he said, but only TDDs can be fined for not doing so. Bruns said there are some cities that haven’t submitted a financial report to the auditor’s office in years.

But the explicit penalty for TDDs is exactly what some legislators, such as Flook, had in mind.

“There are a lot of us, myself included, that think programs like this need to be more closely monitored,” he said.

 


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Comments

Charles Dudley Jr May 27, 2009 | 5:01 a.m.

Let's all hope this passes with flying colors.

(Report Comment)
John Schultz May 27, 2009 | 10:49 a.m.

Well Chuck, the bill did pass as the article mentioned and is only waiting Nixon's signature. However, as also pointed out in the article, these changes don't amount to much, especially those who cry no taxation without representation.

(Report Comment)

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