Study Recommends Limiting TIF Uses

A new study says TIF District’s may not be as good for economic growth as initially thought.

The paper from Ball State University’s Center for Business and Economic Research says Tax Increment Financing Districts are often associated with less employment, less taxable income, and slightly higher tax rates.

TIF Districts were welcomed into law by the Indiana General Assembly in the 1980’s to develop downtrodden areas with infrastructure improvements and business incentives. The study reviewed data from 2003 to 2012 in the areas of capital growth, employment, and tax rates to help make their determinations.

The study also says local governments may be shifting the tax burden from TIF Districts to non-TIF Districts to maintain a similar level of public service. Researchers also found public bodies are issuing debt to maintain TIF Districts – taking on about 20-percent of the state’s outstanding debt in 2013.

The CBER at Ball State recommends that the state limit the use of TIF Districts to counties or municipalities meeting certain pension liability and rainy-day fund requirements.