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New Study Questions Effectiveness Of TIF Districts

Joseph A
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https://www.flickr.com/photos/josepha/

Mayors and city leaders boast about their economic benefits, but a new study says TIF Districts may not be all they're touted to be. 

Ball State University Economist Dr. Mike Hicks says "TIF" refers to "Tax Increment Financing." Cities often set up special TIF "districts" where businesses locate and expand.  Then the city captures the increased property tax value of those areas for alternative purposes not usually associated with the city budget. 

Hicks says TIF money is often directed toward investments that benefit the companies in question, sometimes in the form of tax breaks.  However, he says they've found that the heavy use of TIF districts drives up tax rates in non-TIF areas.  Hicks says the practice has led to drops in economic activity like hiring and wages in nearby geographic areas. 

"The legislature ought to review this," says Hicks. "They ought to see if there is some way to improve the criteria for evaluating these potential impacts so that communities can go back and say this TIF worked for me, or it didn't work for me."

Hicks says the negative impacts of TIFS generally occur over long periods of time.  He says they recommend that Indiana lawmakers review the performance of TIF districts.  He says TIFs can be dangerous for localities in the midst of fiscal struggles.

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