A solid TIF reform that will protect taxpayers
The Kansas City Star
Finally, it’s time for real reform of tax increment financing laws in the Missouri General Assembly.
The No. 1 change? Let’s redefine whose taxpayers have to provide the costly public subsidies that help build shopping centers, office buildings and housing projects.
Cities currently control the process, thanks to state law. They can force other taxing jurisdictions such as school districts, counties and libraries to shell out millions of their public dollars toward private development.
But the jurisdictions are articulating a better idea: Give us the power to opt out of contributing our funds to TIF projects we find questionable.
“A bunch of the taxes paid to us is never actually coming to us,” points out Steve Potter, director of the Mid-Continent Public Library. He estimates close to $1 million annually of funding that’s supposed to go to help build stronger libraries instead is diverted to economic development.
Debbie Siragusa, chief financial officer for the Kansas City Public Library, says cities “ask the library to put its money in some very risky investments.” And the libraries are practically powerless to say no. The library system loses $2.7 million a year to development projects.
School districts lose even more money through this shameful process.
The North Kansas City School District last year railed against an apartment project in North Kansas City to no avail; the city called the shots and diverted $6 million in school funds anyway.
The Liberty, Center and Kansas City public schools have lost millions of dollars originally meant for education when tax money instead was diverted to development projects.
Last week, in a rare victory for TIF critics, Kansas City officials rightly agreed to end a particularly outrageous plan to take more than $10 million from the Raytown School District to build a youth soccer complex.
People who support common-sense changes of TIF law have proposed an elegant solution.
They want the GOP-controlled legislature to give all taxing jurisdictions the right to opt out of allowing their patrons’ tax revenues to be used for a city-promoted project.
It’s an excellent idea.
It would force elected officials in Kansas City, Independence, Lee’s Summit, Blue Springs, Liberty and other cities — as well as lawyers, bankers, bond counsels and consultants who make millions of dollars from TIF — to bring forward top-notch plans that would truly benefit all residents and all taxing jurisdictions.
Cities, of course, don’t want to lose their iron grip on the process. They contend economic development could be threatened if the cities didn’t have access to millions of dollars of other people’s money.
However, the taxing jurisdictions will have good reasons to put their patrons’ money into the pot if certain projects really will bring in new residents and added tax dollars in the future.
Plus, if a city can’t get help from anyone else, it can always put more skin in the game with its own revenues.
Jackson County Executive Mike Sanders points out that the time is right to work for reform in the state capital.
“I have a lot of optimism that these issues can be worked out,” he says.
Kansas City Mayor Sly James and other area city officials should get on board with a solid change that could promote the best possible use of all public revenues for TIF projects.