St. Louis has the highest sales tax rates in the state of Missouri. Some parts of the city see rates as high as 11.679%. But the revenue doesn’t all go to the government. The areas with the highest tax rates may be as small as a few blocks — with extra taxes incurred by special taxing districts that operate largely without oversight from City Hall.

Missouri State Auditor Nicole Galloway took on the city’s poor oversight of these districts in an audit last month. And, on Wednesday’s St. Louis on the Air, she said she’s referred one of them to law enforcement for investigation.

The Washington Avenue Transportation Development District assesses a 1% sales tax on certain businesses in downtown St. Louis. That money was supposed to subsidize a parking lot open to the public, Galloway said. Yet, the audit says, the parking lot’s owners are instead charging their residential tenants to use the gated space, even as they continue to collect the sales tax money.

“They’re basically double-dipping, and all those funds are going to those property owners or private developers,” Galloway said. “When you pay your taxes, that is not what you think you’re going to be spending your money on, right? You want public improvements. Taxpayers want a return on their investment. And this is inappropriate, and something needs to be done about it.”

The city has known about problems with that particular development district since 2014, Galloway said. In fact, then-Auditor Tom Schweich told St. Louis Public Radio he’d never seen a tax district like it — and called for its dissolution. Yet, Galloway’s audit said that city officials “have taken no action to address the problem.”

Galloway also criticized the city for the lack of a comprehensive economic development plan to govern the formation of such districts. While the city defended itself in its official response to the audit, saying that aldermen provide valuable scrutiny of taxing districts in their wards, Galloway disagreed, noting that in some cases, aldermen are the ones asking for a more strategic approach. (The city does say its Equitable Economic Development Strategy plan, expected to be completed in January, will address the issue.)

Galloway, who has announced a run for governor, said she would like to see statewide reforms.

“We have worked with Republican legislators to create change when it comes to these special taxing districts,” she said, noting that even the ability to audit these districts comes from relatively recent changes in state law. “We want to protect taxpayers in this state.”

Galloway also noted that her comprehensive audit of the city of St. Louis continues, with many more city departments expected to be released in the first half of 2020. And, she said, she will be keeping an eye on the city’s ongoing exploration of airport privatization.

“I absolutely understand the questions that citizens have surrounding what the city is undertaking right now,” she said. “We’re absolutely looking at this. That’s a no-brainer.”

“St. Louis on the Air” brings you the stories of St. Louis and the people who live, work and create in our region. The show is hosted by Sarah Fenske and produced by Alex Heuer, Emily Woodbury, Evie Hemphill, Lara Hamdan and Tonina Saputo. The engineer is Aaron Doerr, and production assistance is provided by Charlie McDonald.

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