The Edgewater TIF. Or, Can I Use My MasterCard to Pay My Visa Bill???

As I watch the debates and political maneuvering around the proposed Edgewater development, it is hard not to consider ALL of the repercussions of the decisions that will be made before this is all over. One of the most invisible aspects of the debate is how TIF financing will affect the already-strained finances of Madison’s public schools.
No matter where one lands on the question of how many permanent jobs will be created, the right of people to be heard on development issues that affect their neighborhoods, the value of historic preservation, or public financing for private development, there is one issue that should be made visible to all parties: the TIF financing package is going to hurt the tax base available to our public schools until the TIF is closed out (which could be over 20 years from now).
While proponents of TIF financing rightly assert that TIF increases property value and by extension increases the tax base for the jurisdictions that levy property taxes, there is a hidden side that is rarely discussed publicly in the crush to jump on the “pro-economic development” bandwagon: that benefit does not become available until the district is closed. While districts often close earlier, they may remain open for over 20 years. The benefit does not accrue for years down the road, and in the meantime the value of the affected properties is frozen at the start year of the district.
Not to worry, says the Department of Revenue:
In many areas the school levy represents the biggest portion of the local property tax bill, so it is not a surprise that a large portion of tax increment revenues comes from the school levy. This doesn’t mean that schools don’t get the money they need, however. The school levy that goes toward the tax increment is levied on top of the taxes they need to operate. The school levy is subject to the revenue caps, but within those constraints the schools get all the money they require. The tax increment makes the levy higher than it would otherwise be, but only for as long as the district has a TID in it. Once the TID is closed the larger tax base can help to reduce the tax burden on district residents. (emphasis added)
In other words, the Department of Revenue adopts the same posture adopted by the Joint Finance Committee when it went forward with the plan that left Madison with the biggest cut in state aid to any Wisconsin district: “It’s OK. Schools don’t need to be hurt because districts can raise property taxes to cover the revenue that they lost.” This leaves the dirty work to school districts, who must choose between raising taxes and hurting property owners during a recession, or cutting programs and adding to the damage done by successive years of cuts since Wisconsin’s revenue caps went into effect in 1993.
The Double Whammy
In the case of the Edgewater, and the recently-approved expansion of the capitol square TID #23, Madison Metropolitan School District gets a double whammy of revenue loss. How does this work and what does it mean?
Full post at http://lucymathiak.blogspot.com/

One thought on “The Edgewater TIF. Or, Can I Use My MasterCard to Pay My Visa Bill???”

  1. The late Gene Parks spoke about this very issue numerous times at Board of Education meetings. It’s a pity there aren’t any citizens around these days with both the tenor and volume of Gene:(

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