Jackson County looks at limits on tax increment financing
In the mid-1970’s, states grew aggressively competitive in attracting business to locate within them.
One economic development tool used for this purpose is known as tax increment financing. It is a state- authorized, locally implemented plan that assists in financing public improvements associated with private development projects. Currently, it is authorized in about 33 states, but most of them have experienced some kind of political, legal, and financial issues surrounding its use and implementation.
The County Legislature was recently presented with a TIF policy. According to Jason Hardy, an associate at Chicago’s Center for Economic Policy Analysis, “At best, TIF dramatically increases property values and property taxes, raising and spending millions of dollars simply to shuffle economic activity rather than create anything new.”
That is why policy makers should use TIFs with caution. After all, the success of a TIF district is predicated on changing neighborhoods in ways that increase the property values. Therefore, it’s important that we get things right because in a TIF district, if property values don’t rise, increased tax revenues from won’t pay off the bonds that have financed the projects and taxpayers end up footing the bill.
TIF policies and practices can be altered at the county level through guidelines and usage requirements even though we only have a couple of votes on the local TIF commission. Projects that create jobs, whose major focus brings customers from outside the county, and nonexistent businesses versus businesses already present in the county should take priority. Furthermore, the policy emphasizes a shorter length of time then allotted by state statute.
At our next meeting, we will adopt an ordinance supporting the county executive’s policy because it takes a long overdue stand against the misuse of TIFs.
References: “History of Economic Development,” John Crawford, University of Missouri-Kansas City; “Using Tax Increment Financing for Urban Redevelopment Projects,” John S. Klemanski, Oakland University.