As tax increment finance, or TIF, districts continue to be debated, they were an item of focus at the most recent meeting of the state comprehensive property tax task force. Some lawmakers still aren’t convinced of their effectiveness.
TIF districts allow municipal governments to incentivize business developments in their areas via funding. Mainly, that comes in the form of roads, sewer, and other utilities.
Take Rapid City for example. The community has multiple TIF districts, including one seeking build a theme park and another for several fast-food restaurants. Some residents have petitioned against these TIFs, aiming to make these projects ballot issues for the next election.
One staunchly anti-TIF lawmaker is Rapid City Republican Rep. Taffy Howard. Howard said the use of this funding mechanism is a way for taxpayers to subsidize corporate development.
“One of the arguments in favor of TIFs is that it will bring in all this additional assessed value, it will help keep everyone’s property tax lower. In your time in Department of Revenue, have you ever seen those cities not take the max increase they’re allowed to take? In other words, have you ever seen TIFs actually lower property taxes,” Howard asks.
That question was directed at Department of Revenue Secretary Michael Houdyshell.
"I can think of some situations where cities or counties have not taken the max,” Houdyshell said.
Advocates in favor of TIFs contend they are worth the cost as they bring new developments and jobs to the area while raising land values.
However, Howard pressed, asking if communities eventually take the maximum allowed under policy. Houdyshell said it requires more research.
“I guess I’m not sure, I could certainly look into that for you, because we track that," Houdyshell said. "I’m not sure if they use all of it eventually, or if it ends up going away because they don’t utilize it.”
TIF districts primarily come from the property tax pool, which lawmakers have set a goal of slashing in the upcoming legislative session.