Tax increment finance (TIF) has witnessed widespread adoption and utilization in the past three decades. TIF involves the use of incremental tax revenues that arise from the development of properties within a designated TIF district, and the resulting increased taxable value, to finance projects designed to stimulate economic development activity or enhance quality of life.
TIF, as an economic development tool, was first implemented in California in 1952. Currently, 49 states in the U.S. use TIF.
Local governments use TIF to address a number of issues that include infrastructure development, to stimulate economic activity in under-performing areas within a community, to compete with other jurisdictions, or to develop quality of life assets. In 2015, there were 765 TIF districts and these accounted for nearly 9 percent of the gross assessed value of property in the State of Indiana.
In its role as a ‘platform mechanism’ within a local economy, TIF has relatively high visibility compared to other economic development tools, such as tax abatements, training grants and other incentives. Understandably, with the widespread use of tax increment finance, there is greater awareness among stakeholders about this particular instrument. It is not surprising, then, to find that as the use of tax increment finance has grown, so has the scrutiny of the tool. There is an ongoing push to ensure that transparency and accountability are at the forefront of efforts to monitor and evaluate the impacts, intended and unintended, of the use of TIF.
This study was initiated to contribute to the ongoing need for transparency and accountability of tax increment finance in Indiana.
This study was able to include a broader range of TIF data than have been available to prior analysts and, as such, is able to present a more nuanced analysis of the impact of TIF throughout Indiana. For this study, the effects of the ‘Great Recession’ (2007 – 2009) have been more fully accounted for, thus providing a broader view of changes in TIF activity over time.
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