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
“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.
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
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.
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.”
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.