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Developers quietly add tax at some Missouri stores

Saturday, March 6, 2010 | 8:37 p.m. CST

JEFFERSON CITY — Every day consumers who shop at hundreds of stores across Missouri pay pennies — or dollars — more on each purchase they make, because some stores impose an extra sales tax on which voters don't get a say.

The number of these special taxing districts in Missouri leapt from zero to more than 160 in a little over a decade, which has led state auditors to question how much oversight they receive. A review by The Associated Press found that loose oversight means both consumers and the state don't know much about the special transportation taxing districts.

Stores located within "transportation development districts" charge up to 1 percent in special sales taxes at retail businesses to help pay for infrastructure such as roads, bus stops, interchanges and access roads that move traffic to and from the shopping areas.

The money recovers costs incurred by developers and individual stores often don't have a say in whether they apply the tax, which is commonly applied in shopping centers anchored by a big-box store.

A district can be created when more than half the property owners in an area sign a petition in favor of it. Often, the districts are drawn so narrowly that one developer owns all the property. So one petition signature is all it takes. The rest of the local voters — or shoppers — don't get a say.

The special transportation taxing districts are managed at the city or county level with little state oversight.

Larisha Jones, 26, of Columbia, said knowing about the tax wouldn't change where she shops, but said voters should have a voice in whether they pay a tax.

"We vote for everything else," Jones said. "For those that want to vote for it, they should have that option."

Stores in the special taxing districts are required to alert customers with a notice near cash registers.

Nonetheless, hardly any of the dozens of consumers contacted by the AP at several Columbia transportation districts were aware of the special tax. Several stores within taxing districts showed damaged and unreadable signs, usually placed near the cash register, alerting consumers to the tax as required by law.

Columbia resident Kristy Ensley, 25, was only vaguely aware of the extra .5 percent tax she paid at her local Wal-Mart. She said she makes purchases there because of convenience.

"Otherwise I wouldn't shop here because I don't agree with the taxes," Ensley said. Stores should have to post larger notices to inform shoppers, she said.

Other consumers said they understand the tax is necessary to build roads and interchanges, but they want more notice of when they are paying a little bit extra.

Lake Saint Louis City Administrator Paul Markworth said the majority of consumers in his city probably are not aware that they pay more in sales tax at two developments in his town.

Even people who know which stores charge the extra tax have the opinion of "I can drive somewhere else, but I'm going to be spending gas," Markworth said.

He said many of these projects couldn't be completed without the special taxing districts.

"If you're going into that shopping center, you're going to pay to get there," Markworth said. "It's a really helpful development tool for cities."

But Ensley said developers should plan ahead for the infrastructure costs.

"They're building the buildings, they should take that all into account," Ensley said.

State audits of the taxing districts have revealed problems, including instances of construction contracts not being competitively bid. A 2007 audit questioned a taxing district in Harrisonville that had no way to ensure tax proceeds went to the transportation districts and not to other development projects.

A 1997 state law made it easier for developers to create special taxing districts to help them recover costs. There now are more than 160 such districts, with most clustered around St. Louis and Kansas City.

State law was toughened in 2009 to create fines for districts that don't submit annual fiscal reports to the state auditor's office and to require for the first time that the tax be collected by the state Department of Revenue. The money is now collected by stores, sent to the Department of Revenue and then returned to the district's managing board.

Yet problems persist in how the state tracks transportation taxing districts. Data is kept by three agencies, all of which told the AP they may not have a complete list of districts. The AP compiled its master list by comparing data from the three agencies.

"Definitely there are some problems out there with oversight," State Auditor Susan Montee said.

The court system alerts the transportation department when districts are created, but the department does not keep records unless the district's plans impact state roads.

The auditor's office collects annual fiscal reports and performs an audit once every three years, but is not informed when a new district is created and only recently got a way to punish districts that don't submit a report.

There doesn't seem to be much legislative interest in changing how the districts are regulated, said Sen. John Griesheimer, R-Washington and chairman of the Senate Jobs, Economic Development and Local Government Committee.

Griesheimer said he doesn't think a vast overhaul of the system is necessary.

"There's isolated cases where there has been some abuse," Griesheimer said. But "a little oversight could be a good thing."

 


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