AIM-opposed levee district tax increase bill - no vote in House Committee
MARCH 10, 2020 - Associated Industries of Missouri president and CEO Ray McCarty provided testimony opposing HB 2161, a bill that would expand the ability of levee districts to issue tax anticipation notes and pay for them with assessments levied on businesses and others within the district. Although originally scheduled to receive a vote of the House Conservation and Natural Resources Committee, chaired by Rep. Tim Remole, last night, the bill was pulled from consideration before the hearing started.
In such districts, if debt is incurred, taxes are assessed on all residents and businesses in the district based on the value received as determined by the levee district board. This is important because taxes may be much higher for railroads, businesses and even state agencies like the Missouri Highways and Transportation Department than other residents, based on a value determined by the levee district board that may be comprised of local residents and farmers. One levee district assessed MoDOT for more than $100,000 using this taxing authority.
Under this bill, levee districts would be able to increase taxes on residents of the district, including businesses, in three ways. Click here for the actual language of the bill.
The first method is current law and allows the debt to be incurred if approved by two-thirds of the landowners of the district (and taxes levied to pay for the debt), with each owner having one vote per acre.
The second method currently applies only to levee districts that experienced the floods of 1993 and 1995, but would be expanded under the bill to apply to all districts that have experienced any flood within the previous year. This method requires a vote of the board of supervisors of the levee district and a two-thirds vote of landowners present at the meeting. Importantly this does not require a two-thirds vote of all those that would be repaying the debt, only of those attending the meeting following announcement in the local newspaper.
The third method authorized in the bill would allow the board of supervisors of the district to issue the debt and repay the debt with assessments on landowners with no vote by landowners at all. Like the second method, this authority has previously only been allowed for federally declared disaster areas in 1993 or 1995. This bill would allow this method to be used for any levee district experiencing any flood event within one year prior to the date the debt is incurred.
Levee district fund mismanagement has been the subject of lawsuits brought by residents of such districts. One such lawsuit brought against the Howard Bend Levee District was highlighted by Associated Industries of Missouri in McCarty's testimony. Press reports indicate that businesses within that District have paid millions in assessments and remain unsatisfied with performance by the district in protecting their land. McCarty said one member told him some of the businesses paying the taxes had tried to seek a state audit of the district but could not get the necessary number of residents of the district to request the audit. The only method to audit levee district finances under current law is to request an audit by the state auditor.