Abatements and TIF: Worse Than Ever for Schools

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A study just released by the Census Bureau helps explain why property tax abatements and TIF are growing issues for people who care about public education.

For the first time in 16 years, it reports, local funding (65 percent of which comes from property taxes) provided the greatest share of school funding. That reverses a long-term trend in which state funding has become a larger share of the pie (with federal support accounting for only a small share).

But with states balancing their budgets in part by slashing aid to school boards and other local government bodies, local revenue matters more than ever.

That’s why costly long-term property tax abatements, routinely granted to large companies in the name of economic development, hurt schools more than ever. The same can be said for tax increment financing (TIF) districts, which can divert huge sums of property taxes (and sometimes others) for decades.

And that is bad news for real economic development that benefits all employers currently in a community. Schools also matter a lot for expansion and attraction. Because when an employer considers relocating to an area (and moving key personnel), the first thing those key employees want to know is: how good are the schools?  And the HR director wants to know: we will be able to hire well-educated new-hires? And they will also ask: has school quality been supporting strong home values?

Now more than ever, protecting the local property tax base from costly and unfair abatements and TIF matters for long-term economic development and a sound business climate.

See also Stateline’s coverage here.

3 Responses to “Abatements and TIF: Worse Than Ever for Schools”

  1. Carlotta Says:

    TIFs only freeze the incremental increase that likely wouldn’t have occured if the TIF never came to be. Downtown Atlanta’s Centennial Olympic Park is an excellent example of a TIF done right. The schools will benefit immediately from the development that occurs next to a successful TIF. If the development doesn’t occur, then there is not incremental increase to “lose” anyway.

    • Doug Hoffer Says:

      That assumes the development would not occur “but for” the TIF-financed investment. That is impossible to know.

  2. sorscher Says:

    Businesses should pay tax. Old businesses add value to a community. They pay tax. New businesses add value to a community. They pay tax. A few special new businesses have no more commitment to the community than other businesses. Why do a few special ones pay less tax?

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