Don’t Let Transportation Development Districts Charge Fuel Taxes
A new bill in the Missouri Legislature (HB 1362) would allow transportation development districts (TDDs) to implement fuel taxes along with sales and property taxes. This is a bad idea because TDDs are only partially democratic, not transparent, and very often do not spend their resources on roadwork.
Fuel taxes can be an effective way of paying for roads and bridges in Missouri. As we have argued many times before, fuel taxes tie the act of using roads with paying for the upkeep of the roads. We have even written on how fuel taxes at the county and city level may be a feasible option for road funding as well.
However, there are important differences between state fuel taxes that pay for highways and fuel taxes imposed by TDDs. Fuel taxes at the state level, and even the county or city level, must be spent on highway- or road-related projects. These taxes are only passed by existing, regularly elected legislatures (or a vote of the people); the political boundaries are well known and easily recognizable. State and local governments provide extensive information on how fuel tax revenue is collected and spent.
TDDs are a different story altogether. For instance, do you live in a TDD? Have you shopped in a TDD in the last week? If you can answer yes to any of these questions, do you know what type of tax they collect, what they spend tax money on, where their boundaries are, or who runs the district? Did you ever get to vote on the TDD or its representatives?
Even for those in charge of state oversight, it is hard to know the answer to any of these questions. The fact is that TDDs are ad-hoc specially created taxing districts with idiosyncratic boundaries. They are created through what is not a normal democratic procedure (see “qualified voters” and flexible district boundaries), with boards that are not elected in the normal sense. They do not have to spend their money on roads at all, such as TDDs in Saint Louis and Kansas City that fund streetcars.
It is questionable enough to allow these types of entities to charge sales and property taxes like they do now, but allowing fuel taxes would be even worse. It is easy to imagine a situation where many gas stations in the state quickly become part of microscopic taxing districts that are impossible for the public to be aware of or to track.
State fuel taxes are a reasonable method of funding state roads, but allowing quasi-democratic, non-transparent, and (to the lay resident) invisible taxing districts to use fuel taxes to fund hyper-local desires is more a recipe for highway robbery than highway funding.