The League of Women Voters of Kansas City/Jackson-Clay-Platte Counties recently released its study of tax-increment financing (TIF). In a radio interview on Kansas City’s KKFI, report co-chairwoman Cheryl Barnes indicated that the League first learned of the problems with TIF from former Chairman of the Show-Me Institute Crosby Kemper. Many of the study’s recommendations are similar to those previously offered by Show-Me Institute researchers.
The report provides a good overview of TIF, how it is used and how it impacts taxing jurisdictions. Much of the narrative will be familiar to regular readers of this blog, including this quotation of a study from the W.E. Upjohn institute for Employment Research:
Incentives are still far too broadly provided to many firms that do not pay high wages, do not provide many jobs, and are unlikely to have research spinoffs. Too many incentives excessively sacrifice the long-term tax base of state and local economies.
The report cites a story in The Kansas City Star indicating that in 2018, Kansas City issued $175 million in tax breaks, of which $94 million would have otherwise gone into city coffers.
The League’s recommendations include some social and economic justice planks that might only further developers' ability to game the system, such as Community Benefits Agreements and things such and “sustainable construction.” However, its recommendations for oversight could have come from the Show-Me Institute. The study recommends a more rigorous but-for analysis, capping such incentive packages at 10 years in length, using the blight standard more narrowly and increasing transparency both before and during the period of the incentive.
One additional recommendation from the League that fits well with previous Show-Me research, which focused on the relationship between campaign contributions and TIF awards: “Those seeking public financing, including their representatives, declare city and council campaign contributions and gifts for the prior ten years.”
The desire to rein in economic development incentives is not a function of ideology or partisanship. It is simply a matter of good government and fiscal responsibility. The League has provided a valuable service to its members and policymakers. The time for serious and significant reform is overdue.