Tax increment financing has winners and losers
“Proponents for tax increment funding, including the Michigan Economic Development Corp., which promotes TIF on the Pure Michigan website, argue it has a place in a community’s economic development toolbox. It allows the community to stimulate economic growth by using a portion of the taxes generated within an area such as a downtown or business district for capital improvements and to promote activities within those areas.
“Our downtowns are one of our communities’ best assets,” said Andrea Brown, executive director of the Michigan Association of Planning in Ann Arbor. “They often are the defining character of our communities. It’s where people congregate, spend money and conduct business.”
But critics say in tough times, when cities are making hard decisions about how to spend shrinking tax revenues on essential services, authorities using tax increment financing money fly under the radar of budgetary scrutiny.
“Because of the way TIF financing is structured, the system operates on autopilot,” Eric Lupher, director of local affairs for the Citizens Research Council of Michigan in Livonia, wrote in an email reply to a series of questions about tax increment financing,
“It doesn’t have to go through the same budgetary decision making that other government functions have to go through,” he wrote. “At a time when local governments are making severe cuts to keep their budgets balanced, it is not likely they would continue to spend as much on economic development and cut public safety, libraries and other government services.”
Rummel, Mark. The TImes Herald 2 March 2013.