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Time to fix TIF Saturday, Jun 28, 2008 By Doug Thompson The state constitution should be changed to allow full tax increment financing for roads. People pay $4 a gallon for gas and close to that for milk. They try to squeeze through on roads that just aren't adequate anymore, wasting a lot of that $4 gas. The roads should be widened. Here's the problem: How do you afford widening roads when people are paying $4 a gallon for gas or milk? TIF wouldn't solve the problem, but would help. Tens of millions of dollars would go into road projects in Northwest Arkansas alone. "Tax Increment Financing" is a fancy name for getting an advance on the increased property taxes people will pay once a road's built. You issue bonds to pay for a new highway project. The project greatly increases the value of the nearby property. The taxes collected on that property go up because the value of the property went up. You pay off the bonds with the increase - the increment - in the taxes paid. TIF districts were going to take money from schools and do other terrible stuff, critics said when this topic came up in the last legislative session. That's bunk. If 5 percent of that were true, TIF districts wouldn't be widespread in almost every other state. There are two real problems: 1. TIF can be used for anything. 2. They're hard to kill. They're supposed to be temporary, but the get a constituency and tend to perpetuate themselves. OK. Write an amendment that says TIF can only be used for highway projects. Leave the other infrastructure stuff out of it. Let the Legislature enact a TIF sunset provision with teeth. Have it take effect when and if the people enact the amendment in a statewide election. Since we're talking about a constitutional amendment, consider this: Exempt TIF districts from the calculations for any millage rollback under Amendment 59. That would help schools, counties and libraries more than exempting TIF would hurt them. I would go into detail on that aspect, but everybody sane would go to sleep. An amendment is needed because a big share of would-be TIF revenue is out of bounds without one. Every school district in the state has to set aside at least 25 mills of taxes for maintenance and operations. That money - including increments of it - can't be touched, the state Supreme Court has ruled. Critics say TIF helps rich, built-up areas. OK. Lets not use TIF. Let's let those rich, built-up areas with all their voters and campaign contributors fight it out with the poor, genuinely blighted areas for the same pot of existing highway money. Guess who will win. A road needs building. You have two options to pay for it. One would tap the increased value of the property owned by the commercial developer who benefits directly from the road. The other taps the fuel taxes of all Arkansas drivers, including those who commute to work and most of whom who will never put a tire's tread on that new road. Pick one. --------- Doug Thompson is a Fayetteville-based reporter and columnist for the Arkansas News Bureau and the Morning News. His e-mail address is dthompson@arkansasnews.com. |
