Chesterton Tribune



Ball State study: TIF diverts money from quality of life spending

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The widespread use of tax increment funding (TIF) to support business districts diverts as much as $320 million each year which local governments around the state could use to bolster their communities, according to a recent report from Ball State University.

“The Fiscal Impact of Tax Increment Financing in Indiana,” an analysis by Ball State’s Center for Business and Economic Research (CBER), has found that on top of the lost revenue, local governments statewide are spending more than $10 million per yearÑlikely as much as $30 million per yearÑon consultants simply to administer TIF districts, BSU said in a statement.

“The negative impact of TIF use on other local governments is a shocking figure,” said CBER director Michael Hicks, who co-authored the report. “While many counties use TIF sparingly or not at all, some counties use TIF so heavily that the overall impact on property values is negative.“

“The CBER study reviewed local option income taxes, sales taxes, and property taxes in Indiana counties from 2003-13 and found that millions of dollars are being diverted from local governments to redevelopment commissions overseeing such districts, commonly known as redevelopment zones,” the statement said.

“While modest use of TIF surely has a place in Indiana’s public finance system, the runaway use of TIF has come at great cost to local governments,” the statement said, since “for every dollar lost to property tax caps, local governments have given away as much as 41.5 cents in tax revenue each year to their redevelopment commissions.”

“For communities that struggle to provide bus services to schoolchildren, this may be an especially acute problem,” said Dagney Faulk, director of research at CBER. “The likely school share of this TIF capture is sufficient to pay 2,400 teachers or operate and staff a full 900 additional school buses each year.”

Hicks also noted that recent research by CBER on TIF use in Indiana and elsewhere has confirmed earlier studies which reported no economic development impacts for the average TIF district in Indiana. The study also details the impact of TIF by county.

“Public policy adjustments could reduce or eliminate the TIFs that have negative or no effect,” the statement said. “The revenues would be better spent on paving roads, improving schools, and other measures to enhance quality of life. Another recent CBER study found that jobs follow workers looking for nice places to live, not vice versa.”

CBER’s recommendations include tightening TIF reporting standards with more transparency and requiring all elected bodies affected by a TIF district to vote on how to spend their contributions.


Posted 2/8/2016




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