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Economic Development Economic Development in Hard Times: TIFs, in Hard Times: TIFs,
CAPCOs, and Other Bad CAPCOs, and Other Bad IdeasIdeas
Greg LeRoyGreg LeRoy
Good Jobs FirstGood Jobs First
EARN ConferenceEARN Conference
September 13, 2011 ~ MilwaukeeSeptember 13, 2011 ~ Milwaukee
Your Power-PanelistsYour Power-Panelists Julia Sass Rubin of the Bloustein Julia Sass Rubin of the Bloustein
School at Rutgers School at Rutgers
Deborah Howlett of New Jersey Policy Deborah Howlett of New Jersey Policy PerspectivePerspective
Kathy White of the Colorado Fiscal Kathy White of the Colorado Fiscal Policy InstitutePolicy Institute
Greg LeRoy of Good Jobs First Greg LeRoy of Good Jobs First (moderator)(moderator)
$70 Billion per Year!$70 Billion per Year! Property Tax AbatementsProperty Tax Abatements TIF: Diversion of Property and Sales TaxTIF: Diversion of Property and Sales Tax Corporate Income Tax Credits Corporate Income Tax Credits Sales Tax Exemptions Sales Tax Exemptions Enterprise Zones Enterprise Zones Land Write-downsLand Write-downs Infrastructure Aid Infrastructure Aid CAPCOs CAPCOs
Definition of Tax Definition of Tax Increment FinancingIncrement Financing (TIF (TIF
)) A diversion of the future growth (the A diversion of the future growth (the
“increment”) in one or more tax “increment”) in one or more tax revenue streams within a revenue streams within a geographically defined “TIF district” geographically defined “TIF district”
To subsidize (re)development in the To subsidize (re)development in the districtdistrict
Originally enacted to reverse physical Originally enacted to reverse physical “blight,” but often since perverted“blight,” but often since perverted
Our Theory of Change:Our Theory of Change:Dormant Public PowerDormant Public Power
To create good jobs and reduce poverty To create good jobs and reduce poverty
To grow a stronger, fairer tax baseTo grow a stronger, fairer tax base
To engage taxpayers in local economies To engage taxpayers in local economies
To strengthen local businesses, foster To strengthen local businesses, foster entrepreneurial cultureentrepreneurial culture
To curb sprawl and global warmingTo curb sprawl and global warming
Site Location 101Site Location 101 Business basics matter (not tax Business basics matter (not tax
breaks)breaks)
Public officials in “prisoners’ Public officials in “prisoners’ dilemma”dilemma”
““Job blackmail,” “Economic war Job blackmail,” “Economic war among the states” (and suburbs) among the states” (and suburbs)
Unregulated site location consultantsUnregulated site location consultants
Problem #1Problem #1
Popular Popular Economic Economic
MiseducationMiseducation
Problem #2Problem #2
Too much retailToo much retail
Problem #3 Problem #3
Too Too
little little greengreen
Problem #4 Problem #4
Fuel Fuel
for for
sprawlsprawl
Problem #5Problem #5
Subsidized Shops Running AwaySubsidized Shops Running Away
Problem #6Problem #6
Lack of Lack of coordinatiocoordinatio
n with n with transit and transit and job trainingjob training
Problem Problem #7#7
Covert Covert budget budget erosionerosion
Problem #8Problem #8
Bias against Bias against small, local entrepreneurssmall, local entrepreneurs
Reform #1: Disclosure!Reform #1: Disclosure!
Annual, company-specific reporting Annual, company-specific reporting of the deal (costs) and outcomes of the deal (costs) and outcomes (benefits) (benefits)
On the WebOn the Web, accessible, searchable, , accessible, searchable, downloadabledownloadable
Time for a Report Card! Time for a Report Card!
Show Us the SubsidiesShow Us the Subsidies 51-State “report card” on major-51-State “report card” on major-
program disclosure: company names, program disclosure: company names, dollars, jobs, wages, address – and dollars, jobs, wages, address – and outcomesoutcomes
Only two states get a “B” (many still Only two states get a “B” (many still fail to report outcomes)fail to report outcomes)
13 states plus D.C. still in the 13 states plus D.C. still in the Dark AgesDark Ages
Solution #2: Solution #2: Location EfficiencyLocation Efficiency
In areas with transit, no In areas with transit, no subsidies unless the worksite subsidies unless the worksite is served by public is served by public transportationtransportation
Solution #3: “Green Solution #3: “Green Strings”Strings”
No new subsidies, no renewal of No new subsidies, no renewal of subsidies for dirty commercial-subsidies for dirty commercial-industrial buildingsindustrial buildings
E.g., no abatements for office E.g., no abatements for office buildings w/o LEED or LEED-EBbuildings w/o LEED or LEED-EB
E.g., no tax credits for factories w/o E.g., no tax credits for factories w/o clean production systemsclean production systems
Solution #5: Reduce Solution #5: Reduce and Target Retail and Target Retail
SubsidiesSubsidiesLimit strictly to areas such as Limit strictly to areas such as
“food deserts” that truly lack “food deserts” that truly lack basic retail amenitiesbasic retail amenities
Solution #6: Solution #6: ClawbacksClawbacks
““Money-back guarantee” that Money-back guarantee” that provides for repayment of all or a provides for repayment of all or a prorated share of a subsidy if a prorated share of a subsidy if a company fails to deliver jobs and/or company fails to deliver jobs and/or other community benefits in a other community benefits in a reasonable period of timereasonable period of time
Related safeguards: rescissions and Related safeguards: rescissions and recalibrationsrecalibrations
Solution #4: Priority Solution #4: Priority Shift to Small Shift to Small BusinessesBusinesses
Reduce subsidies to sectors/ Reduce subsidies to sectors/ companies with best access to companies with best access to credit marketscredit markets
Increase subsidies to small Increase subsidies to small businesses most hurt by credit businesses most hurt by credit squeezesqueeze
Solution #7: Unified Solution #7: Unified Development BudgetDevelopment Budget
Annual report to legislature Annual report to legislature itemizing all forms of spending itemizing all forms of spending for jobsfor jobs
Purpose: treat all forms of Purpose: treat all forms of spending fairly, including tax spending fairly, including tax expendituresexpenditures
2011-2012: A Perfect 2011-2012: A Perfect StormStorm
State revenues still depressedState revenues still depressed
No more stimulus reliefNo more stimulus relief
Jobs issue highly politicizedJobs issue highly politicized
Rising taxpayer expectations re: Rising taxpayer expectations re: government transparencygovernment transparency
Fightback ToolkitFightback Toolkit Accountable USAAccountable USA
Show Us the SubsidiesShow Us the Subsidies
Subsidy TrackerSubsidy Tracker
Public-Private Power Public-Private Power Grab Grab
Accountable USAAccountable USA51 state web 51 state web pagespages
One-stop shopping One-stop shopping for scamsfor scams
Case studiesCase studies
Big GiveawaysBig Giveaways
Links to alliesLinks to allies
Big Giveaway IndexBig Giveaway Index Passive Investment CompaniesPassive Investment Companies
Single Sales FactorSingle Sales Factor
Film/Media Production SubsidiesFilm/Media Production Subsidies
TIF – Tax Increment FinancingTIF – Tax Increment Financing
Unregulated Site Location Unregulated Site Location Consultants Consultants
Subsidy TrackerSubsidy Tracker
First-ever searchable national First-ever searchable national database of company-specific database of company-specific
subsidy datasubsidy data
Public-Private Power Public-Private Power GrabGrab
Ohio, Wisconsin, Iowa and Ohio, Wisconsin, Iowa and Arizona privatizing economic Arizona privatizing economic developmentdevelopment
20 years of troubled history20 years of troubled history
Over-Arching MessageOver-Arching Message
““At a time when state At a time when state governments must make governments must make difficult budget decisions, difficult budget decisions, spending to create jobs spending to create jobs should be transparent, fair should be transparent, fair and effective.”and effective.”
ContactContact
Greg LeRoyGreg LeRoy
Executive DirectorExecutive Director
Good Jobs FirstGood Jobs First
[email protected]@goodjobsfirst.org
www.goodjobsfirst.orgwww.goodjobsfirst.org
202-232-1616 x 211202-232-1616 x 211