A new statewide program aimed at helping people who are going through the criminal justice system to receive mental health and substance abuse treatment was announced earlier this month.
Pity the poor economic researchers at the University of Southern Indiana. They are in a no-win situation.
Two recent, non-partisan studies have determined that Tax Increment Financing is a weak tool for job growth and economic development. The latest one by the Indiana Office of Fiscal and Management Analysis, and the Indiana Legislative Services Agency, showed that Grant County citizens aren’t the only ones who have noticed the problem of being eaten up by TIF without much to show for it.
The Indiana Office of Fiscal and Management Analysis, and the Indiana Legislative Services Agency, recently determined that for all its potential heartache, TIF doesn’t do much to actually create economic development.
But the folks at the Indiana Economic Development Association, the trade group for organizations like the Grant County Economic Growth Council, have commissioned yet another study that it promises to be “myth busting” regarding TIF. In fact, our own Tim Eckerle, director of the Growth Council, is on the steering committee for the study, which, in addition to busting all those myths about TIF, will be “fair and non-partisan,” says Lee Lewellen, CEO of the IEDA.
Lewellen went on to say that “Powerful myths and considerable misinformation about TIF activity in Indiana regularly cloud understanding and perceptions about the value of the TIF tool.” ...Ok.
Trouble is when you’re the economic development industry and you announce you are going to bust myths about an economic tax financing product that helps fund your industry, and that tax has just been criticized by not one but two other studies, you are pretty much tipping your hand about what you expect your study to say. It is due out early next year, presumably in time to be seen by the Indiana General Assembly who will be digesting the not so good news about TIF so far.
This means the researchers at USI are left to produce a study that no one will take seriously because the people who commissioned it are already touting TIF. If by chance, it doesn’t put TIF in a good light, one could wonder if it will see light at all.
Even though it will be finished quickly, Eckerle told the Chronicle-Tribune that this study would have a wider scope than the others.
“There have been two reviews of TIF and its use in Indiana that were released in 2015; and, both of those reviews were narrower in scope than the study commissioned by the Indiana Economic Development Association.” Eckerle reported in an email. “In no way were there any pre-determined outcomes established for the TIF study as any conclusions drawn by the independent university researchers will come directly from the data being analyzed.”
In addition to Eckerle, another fellow spending a fair amount of time in Grant County, Barnes and Thornburg attorney Bruce Donaldson is on the steering committee. He earns money for his firm directly from work as bond counsel on local TIF projects. According to an email to IEDA members, also serving with Donaldson and Eckerle is Loren Mathes, of Umbaugh, a firm that makes money advising communities on their options regarding economic development – including TIF.
Not every example of tax increment financing project is bad. When it’s overused, as it has been in Grant County, it can wind up starving municipalities and schools of needed revenue in the face of property tax caps.
And it doesn’t work terribly well for businesses that couldn’t afford the project without TIF. It is designed to help pay for economic development through an increase in property taxes within a TIF development district. When major companies, like Wal-Mart or Dollar General, are looking for incentives to build facilities, it can be a workable tool to attract jobs and increase quality of life. When more fragile economic development projects involving companies like, Echelon in Gas City, and about anything that has been tried at the northwest corner of Ind. 18 and Interstate 69, tax money gets spent but jobs, if they ever come, fade quickly. The TIF districts and their property tax drain remain.
TIF does allow politicians and the economic development industry to finance projects that wouldn’t get done any other way. That’s because, as we have seen, most projects that can’t attract their own capital without public money, like TIF, shouldn’t be done.
Marion’s TIF districts brought in almost $5 million in 2013. All of that money was used to fund some development in the TIF districts or payoff TIF bond debt. A total of $101 million in Marion property taxes is now obligated to TIF debt; add interest and the figure goes up to $155 million.
Let’s hope the Indiana General Assembly takes up this issue and restricts the use of TIF in the future. And let’s hope the good researchers at USI can catch a break.