David Stokes

Over the past decade, Missouri has seen an explosion of new, alphabet soup-like taxing districts that use increased tax rates to channel public dollars toward private purposes. These districts include the use of tax increment financing (TIF), transportation development districts (TDD), community improvement districts (CID), and more. Nixa is currently considering imposing one of these districts, a CID, for a new street that will primarily access the stores in McCroskey Plaza. Nixa city officials should think twice before they embark on this course of action.

There are two primary problems with the use of CIDs and the closely related TDDs. The first is that they fund primarily private goods with public dollars. The proposed Nixa CID will increase the sales tax within the CID to fund transportation improvements — not much more than expanded access to McCroskey Plaza — that will increase the profitability of businesses within the center. These private benefits will be paid by tax dollars, rather than private investment, and the benefits will accrue almost entirely to the private party.

The other problem with these taxing districts is one of transparency. The state auditor’s office has issued reports documenting deficiencies in the management and accountability of public dollars by these districts throughout Missouri. These districts fail to comply with state laws in a number of areas, including the transparency of the special taxes, use of competitive bids, and filing of annual financial reports. If this council chooses to enact a CID, the council should carefully oversee the CID to insure it complies with all state laws and any local requirements the council might add.

These transparency issues include an independent board of trustees for the district. Generally, these boards are made up of representatives from the businesses involved with establishing the district. The Nixa council should work with the developers to institute a board of directors that will primarily answer to the taxpayers of Nixa, and not the owners of the property.

Taxpayers who choose to shop in these stores should be aware of the extra taxes they must pay. The special tax should be broken out separately on the receipt, and signs should be posted within the stores noting the special taxes. This is not just my opinion; this is a state law, albeit one not followed by many taxing districts around the state. If shoppers are aware of the increased taxes and still choose to shop within the district that is their choice.

The Nixa city council should take a very careful look at the possible tension between public and private interests in this proposal, and should avoid asking taxpayers to foot the bill for private interests. If the council determines that a CID is an appropriate application in this instance, all possible steps should be taken to make certain the new taxing district is responsible to the people. Many similar taxing districts in Missouri have failed both of those tests – producing what is best described as a non-nourishing alphabet soup.

About the Author

David Stokes
David Stokes was a policy analyst at the Show-Me Institute from 2007 to 2014 and was director of development from 2014 to 2016.