Wednesday, October 26, 2011

A tiff over TIF

Over at Show-Me Daily, Bruce Stahl has an explanation of Tax Increment Financing (TIF) for residential development and its effect on education funding. As he explains:
TIF allows developers to freeze taxes at a base level and invest any increase in property tax value that otherwise would go toward taxes into developing the property, for up to 23 years. Essentially, TIF allows newly-developed property to escape the higher taxes that higher property values normally entail. If a residential developer acquires approval of a TIF plan from the city, new homeowners can send their kids to public schools but the taxes collected will go towards paying off the debt for the development instead of to financing their children’s education. A good deal if you can get away with it.
In short, a TIF used to finance a new subdvision will increase enrollment in public schools but won't generate a corresponding increase in public-school funding.