Truth in tax increment financing arrives with property tax bills

Belleville is about to get a second Walmart Supercenter, and this one is coming without the lure of tax increment financing.
Belleville is about to get a second Walmart Supercenter, and this one is coming without the lure of tax increment financing. File photo

The St. Clair County property tax bills are arriving in local mailboxes, and with them comes a little piece of truth: Tax increment financing districts grabbed $45.7 million of the $343 million collected in the county last year.

That is 13.3 percent.

The bills and the pie chart showing the TIF slice stand in contrast to recent arguments by Belleville City Hall leaders and attorney Kevin Vick, whose firm advises business development.

Belleville leaders tell the business community that in 2015 when they issued $493,911 in incentives, they generated slightly more than $1 million in taxes. Sounds great, except that Belleville collected $18.6 million from taxpayers for TIF districts during the fiscal year ending April 2016.

There is a resistance to tax increment financing for no good reason, Vick told the St. Louis Business Journal as part of a panel of experts on southwestern Illinois developments.

“The only tax revenue diverted to help finance the redevelopment are the tax dollars generated by the incremental increase in the assessed valuation of the improved property,” he said. “And you can’t lose something you never had to begin with. Without the TIF, the development would not occur and the increased tax revenue, which is supposedly lost, would never materialize and the benefits of the economic activity and improvements to the community would not be realized.”

If that’s true, someone needs to write St. Clair County taxpayers a refund check for $45.7 million.

The problem is whether the TIF made the development happen, or whether it would have happened anyway without a gift to the business from taxpayers.

Vick and Belleville leaders say TIF dollars create business. It may be a tool, but is it worth the cost?

When the East-West Gateway Council of Governments studied the issue in 2011, it found that TIF dollars created little growth that would not have happened anyway. What the districts really did was take about $6 billion from taxpayers and other taxing districts, mainly schools, and allow one community to rob their neighbor of potential businesses that would have developed regardless.

Besides taxpayers, the pain fell on poorer communities unable to leverage TIF districts like their richer neighbors.

For a more up-to-date example that TIF isn’t needed to drive growth, look to Belleville and the new Walmart Supercenter being planned. Walmart will build a second Supercenter in Belleville based on market opportunity, not on getting TIF dollars.

TIF is the No. 2 recipient of property taxes behind schools. To believe the districts do not drive up property taxes is to believe the school costs do not increase during the 23 years — or the 35 years in the case of Belleville’s $11 million TIF 3 — that a TIF district captures a new development’s tax revenue.

To its credit, Belleville has moved toward special sales tax districts in which the merchant must face the competitive disadvantage of collecting a higher sales tax to get a taxpayer benefit.

One reason is enough to resist tax increment financing, and it is that slice of pie chart arriving in your mail.