Louisiana’s TIF Craze Runs Counter To Best Practices
In the Lafayette Parish area, voters have become increasingly distrustful of the numerous re-development authority bills being passed through the Legislature (where an unelected board is given the power to levy tax increases, resulting in TIFs) and locally created TIFs.
From researching other states in the country, is appears that TIFs, their use and definition, have become convoluted in Louisiana. It would appear that by definition, a TIF district is simply an area where a “baseline” of tax revenues is established, and any increase in revenues is dedicated towards improving that area.
From the Cook County, Illinois site:
Where does this new property value come from? It can happen in one of three ways. First, there could be new development on vacant land that, before the new project was built, paid little or no taxes. Second, there could be improvements to existing properties, such as an addition to a house, a factory, or a store. Third, the taxes on existing properties could go up, either because of inflation (sometimes called “natural growth” in property values) or because of gentrification in the neighborhood. In any of these cases, the new tax dollars go to the project fund controlled by the TIF district, not to the City, the schools, or any other taxing body. Money can be transferred between TIFs, but only between adjacent TIFs.
Now, I’ll agree the State of Illinois is probably not the best state to present an example. Many of our elected leaders, especially the reform-types, like to point to Texas, and with good reason. Texas has no state income tax, but higher property taxes, with little homestead exemption so more people pay into the tax pie. Having such a structure de-centralizes government in the state, giving the local taxpayers more say in how their tax dollars are spent. A similar structure, in my opinion would be a positive move for Louisiana, though that would be a debate for another day.
However, Texas, especially the Dallas area, has done a decent job using TIF districts, and here is the FAQ page from the Dallas Economic Development department regarding the TIF guidelines:
Nothing there about an increase in the sales tax rates or property tax rates.
Rather, the baseline is established, and therefore, any NEW developments or improvements would automatically increase the amount of revenues paid on property taxes, and those increase revenues would be dedicated to spend on the blighted area. Increased sales tax revenues would occur when new retail stores/businesses are opened up in the TIF area. This is apparently what and how TIFs are supposed to be operated and used.
Why are we doing it differently in Louisiana? Why are local governments taking the TIF model, and apparently convoluting it, to INCREASE sales and/or property tax rates on our people?
We need a good, strong conservative legislator, or preferably a few of them, to start asking these questions, especially before any more “re-development authority” bills move forward in the Legislature. Legislators are pre-occupied with just 16 days to go in the current Session, but maybe we can get some of these questions asked, debated and answered next year.
Alderman – Town of Iota, Acadia Parish