School Board, 8.26.19: Insatiable

School Board Meeting 08/26/19 from Whitewater Community TV on Vimeo.

Update, evening of 9.9.19: Although this discussion of tax incremental financing (TIF) took place at a school board meeting, a program like this is (obviously) very much an initiative of city government and special interests. School districts like Whitewater’s have a role on a joint review board that oversees a tax incremental district’s creation; that role doesn’t compensate for the diversion of revenue that a tax incremental district causes (“An expert on inequities in housing and economic development, [Molly] Metzger was increasingly bothered by the fact that land use policies that had long been touted for their ability to jump-start development and create economic opportunity in underserved neighborhoods were doing neither. The closer she looked, the more she saw that TIF—which front-loads future property tax revenue to speed up selected projects—seemed to benefit neighborhoods that were already gentrifying and siphoned off funds that should have gone to public schools.”)

Of Whitewater’s 8.26.19 school board agenda of 17 items, the item at 8D, about students’ mental health, was notably important.  (See School Board, 8.26.19: Health.)

Another item (8A), from Whitewater’s city manager, came close in importance: a presentation on tax incremental financing, the municipal scheme of offering public incentives to private developers while hoping to use any (incremental) tax receipts from their development to pay for the publicly-funded incentives offered to the developer.

Tax incremental financing is trickle-down economics by another name, to the certain benefit of developers but the uncertain benefit of residents whose services depend on general tax revenues and not segregated incremental ones.

Tax incremental financing meets widespread opposition from mainstream economists of the right, center, and left; supporting it are mostly private developers who’ll get public benefits and the municipal officials they’re able either to beguile or bulldoze.

The Whitewater city manager’s presentation appears from 15:05 to 39:35 on the video above. The city’s existing tax incremental districts may close in a year or two, but already the city government is considering more.

A few remarks:

The best record is a recording. The city manager’s remarks are a trove of valuable information: how municipal officials think.  No summary would be so revealing.

One can see in these remarks how, at least in part, advocates of tax incremental financing will make their case.

At one part of his presentation, the city manager aimed to reassure that, by his estimation, tax incremental financing had – implicitly by itself – brought tens of millions to the city. (Yes, really.)

For now, it’s enough to remind briefly that his analysis stood on the erroneous ground of one (or perhaps two) common logical fallacies: post hoc ergo propter hoc; cum hoc ergo propter hoc.

A lengthy and detailed discussion over tax incremental financing is in this city’s future.

There was, however, nothing in the 8.26.19 presentation that would cause a reasonable person to abandon the strong economic consensus against tax incremental financing. On the contrary, the claims offered, however revealing of special interests’ desires, only bolster one’s resolve in opposition.

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1 year ago

Hello. So someone sent me this post about calculating the value of a TID. You are definitely right that you cannot determine the value generated by public improvements only from looking at how a TID’s assessed value changes. Your city manager in the video is looking at two values on a table and thinking that you can subtract one from the other and that’s how to determine if a TID generated value from public incentives. The state does use those terms that make it look like you should subtract them. That’s wrong but I see it a lot from city mayors and managers. Doing that shows that the TID grew but not WHY. First, there is a measure of whether the TID produced an increment above public infrastructure/incentives. Second, you have to look at a TID over time versus a TID in/TID out assessment. That data is hard to get if the TID is old. I looked up the phrases you used. I’m not sure if that makes your point easy to understand but it is right that you cannot subtract to show if public investment CAUSED the growth. Whitewater is not that big so right off the bat it raises a red flag when someone says there has been that much caused by public incentives. FWIW, in most cases it’s hard to tell. If someone looks at all the data better they may see some gain (who knows) but it takes more than subtracting one value from another.