ST. LOUIS — Special taxing districts will soon be put under the microscope at the Board of Aldermen.
Aldermanic President Megan Green said she plans to form new committees to examine the operations of the districts, which levy sales and property taxes and are largely self-governing.
She said she expects the committees to consider new regulations.
ºüÀêÊÓƵ contains dozens of the districts. They have the power to charge special taxes to pay for infrastructure, development or services within their boundaries.
Some are more public-facing: Large commercial areas like Downtown, South Grand Boulevard and the Central West End have districts that market their areas and pay for extra security and maintenance. Recently, a couple of residential neighborhoods formed districts to pay for similar services.
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But most districts exist primarily to help finance development projects, and all of them have come under scrutiny in recent years.
In 2019, then-State Auditor Nicole Galloway published a report blasting the city for its handling of the districts, many of which are authorized by aldermen.
She said officials had failed to collect annual financial reports and budgets from the districts, as required under state law. She said the city didn’t do enough to ensure there were some people on district boards independent of developers or other vested interests. She lamented how overlapping taxing districts had led to the highest sales tax rates in the state — up to 11.679%.
The auditor acknowledged that oversight issues are not unique to ºüÀêÊÓƵ, and that, once a district is approved, the city is somewhat limited by state law in its oversight role.
But Galloway said the city needed to do a better job on the front end in weighing whether proposed districts are in the public’s best interest.
At the time, city officials disputed some of the auditor’s findings as inaccurate and ill-informed. They said that neighborhood-level districts build community and business support before they’re created. They said it wasn’t their job to ensure independent voices on developer-dominated boards. And they said city economic development staff evaluate the districts designed to help pay for new projects to ensure the revenue they produce is necessary to meet financial obligations.
Green said the city may need to consider other factors, like whether a special tax is really the best way to pay for something.
Some have also been struck by the recent, voter-approved formation of districts in the largely residential Holly Hills and ºüÀêÊÓƵ Hills neighborhoods in part to pay for private security patrols, which often employ off-duty police officers.
The developments have reinvigorated debate about whether relatively safe neighborhoods should be able to, in essence, buy extra police protection that poorer, more dangerous neighborhoods can’t as easily afford.
Green said the city needs to consider how new districts affect the city as a whole rather than just the project or neighborhood in question.
“When we just haphazardly create all these special taxing districts,†she said, “we’re fragmenting the city just like the county in a lot of ways.â€
A subcommittee of the board’s public safety committee will examine the private policing issue specifically, Green said.
A special committee will consider the broader issues with the districts raised in the audit.