How does it feel when the shoe is on the other foot?
Not great if you're Marseilles Mayor Jim Trager.
When the state legislature rushed through an income tax hike at the end of its last session in January, it made sure to enact a provision stipulating the share of income tax paid to municipalities would be frozen at current dollar levels. So although the tax revenue pool will increase, cities won't see an extra penny.
If that formula sounds familiar, it's because it's the exact same idea as a tax increment financing district. Once a city designates land as a TIF district, the property tax it generates — for all bodies, including school districts, libraries and so on — is frozen and the additional taxes generated as the property is developed are diverted away from all the usual tax collectors.
Simply put, if a new megamart opens in a vacant lot, obviously that means the land will be worth more and taxed at a higher level. But for the life of the TIF, the taxing bodies involved by and large won't see any extra revenue as the money is funneled toward site improvements or other projects. This arrangement is especially troublesome when residential TIF districts result in new homes with young families and public school students attending districts who do not get the extra revenue associated with the development.
"Unfortunately, none of that tax hike is going to come to the cities, villages and counties," Marseilles Mayor Jim Trager said at a City Council meeting late last month. "In their infinite wisdom, (the legislators) thought that we didn't need that money, so they left us out of the formula."
It also was at a Marseilles City Council meeting about a year ago —Feb. 3, 2010, to be exact — that Trager and the rest of the council showed with votes they know well how the TIF concept works. In approving a $217,700 contract for the South Main Street Walkway project, the council committed $51,000 in city funds. from where? Surplus TIF funds, the bulk of which was the incremental revenue diverted from other taxing bodies.
Continue reading "Cities find TIF shoe on the other foot."
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