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Taxpayer challenge to CID sales tax election authorized

Updated: Jun 29, 2022

The Missouri Court of Appeals, in Henderson v. Business Loop CID, et al. (Mo. App. Nov. 26, 2019) recently reversed a lower court’s dismissal of a taxpayer challenge to a Community Improvement District (“CID”)’s election to approve a sales tax on businesses within the Business Loop CID’s boundaries. A CID is an entity, either a not-for-profit corporation or a political subdivision, formed by property owners or business owners within a specified area. CIDs are formed typically to raise funds for public infrastructure, and their powers include the ability to levy and impose special assessments and sales tax, subject to voter approval. In December 2015, the Business Loop CID announced that it would hold a sales tax election and sent mail-in ballots to qualified voters (which, for CID purposes, includes registered voters residing in the District). Missouri statute § 67.1545 RSMo. describes the required procedures for CID sales tax elections. The Plaintiff, Henderson, was a registered voter living in the CID’s boundaries, and she voted against the tax. Henderson filled out the mail-in ballot she received, which required voters to print and sign their names and include their address. The CID hired four election judges – two Democrats and Republicans. When Henderson went to the CID’s office to drop off her ballot, her ballot was placed in an unsecured file box. The CID announced several hours later that the tax passed by a vote of 4 to 3. Henderson later filed a lawsuit claiming that the election was unconstitutional because the ballots were not secret, there was not a secured ballot box, there was insufficient notice of the election, and there was not a neutral election administrator. The CID responded to the lawsuit by arguing that there is “no statutory authority for a challenge to a CID sales tax election.” The trial court agreed with the CID and dismissed the lawsuit. On appeal, the Court of Appeals noted that the authority to contest an election must be “specifically authorized by statute,” and that the CID statutes do not specifically authorize election contests. However, the Court of Appeals agreed with Henderson that general election law statutes (such as § 115.575.2 RSMo.) provided for the contest of “any election,” and Chapter 115 RSMo. further states that it “shall apply to all public elections in the state.” Accordingly, while election contests are not specifically authorized by the CID statutes, they are authorized under other Missouri statutes. The Court of Appeals therefore reversed the trial court’s dismissal of the lawsuit, and remanded the case to the trial court for a determination on the merits regarding the issues raised in Henderson’s Petition.

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