Letter: Rising taxes a certainty with new Jasper tax district
There are a few things we all need to understand about how business growth within a Tax Increment Finance (TIF) area affects Dubois County.
TIF is a quick way to get funds for infrastructure development via the bonding process. As with any bond, it drives that government entity into debt until the loan is paid off. Since TIF is designed for economic development bonds, it is my hope that Mayor Seitz will ask the Redevelopment Commission (RDC) to bond some amount of money sooner rather than later and is why you need to understand what the negative consequences may be for you.
The TIF drives property taxes higher as long as there is active development and/or bonding within an existing TIF area. Personal property taxes (PPT), farm property taxes, and business personal property taxes (BPPT) will all rise countywide in proportion to the loss of new assessed value.
This occurs because the tax rate the State imposes on every township, city, town, and county government entity will drive property taxes up. As you lose new assessed value while budgeting for yearly spending, the property taxes must rise to compensate for the removed new assessed land/equipment/building value.
Thankfully for Hoosiers, we have property tax percentage caps that eventually stop over-taxation of our property no matter how high the tax rate goes. The flip side is that, though the caps are good for us, those actively developed TIF areas can be bad for town, city, and county governments; including schools and airports.
Why? The business personal property taxes are part of the formula to fund all government from within a county. As development grows within a TIF, these government entities are now cut off from funds that those taxes would have provided for all the new and expanded services that government will need to provide. Police, fire, roads, etc. will all be affected.
County and city governments have only three choices to address this reduction in funding: 1) reduce spending by budgeting, 2) raise taxes, or 3) go into debt spending to continue things as they are today.
We are one of the few counties in Indiana that spends less than the incoming tax revenue. Active development within TIF areas presents a challenge to the government to provide more service with less revenue during the life of the TIF. Once the bond is paid off, a responsible government votes the TIF out of existence and we see funding return to normal.
The citizens of Dubois County need to know that Gov. Pence and many state level representatives want to eliminate the business personal property tax to make our state even more attractive to new and existing companies. This would make bonds from a TIF even more of an issue because once the payment mechanism is removed, the revenue from other taxes will need to be diverted to pay off the bond. Therefore, the issuing of any bonds before the State has dealt with the business personal property tax issue is highly risky.
We must understand what a TIF is and hold our current and future representatives accountable. The scope of the Jasper TIF is large and the potential funding problems and debt are equally as large. We need to be educated about this and hold our currently elected officials accountable. We must additionally elect good representatives who fear the power of a TIF and the redevelopment commission and who will pledge use them responsibly.
Chicago, for example, lost control of their TIF after 38 years of extensive use and now swims in debt, has underfunded pensions, and chronic underfunded schools.
We don’t want that here!
We need each individual to be aware and vocal because TIF has multiple loopholes that could allow for corruption and for debt to flourish should people allow it. We have already seen the redevelopment commission and the council at odds over the Parklands and who should own it. Then on December 17 the council would not follow the will of the people about the Jasper TIF and sided with the Mayor and the redevelopment commission in favor of it.
This call is for you to get informed and be active. Vote for people who represent our communities and expect these people to stay active in the economic development of our county. Accountability is sorely needed. This is why I am writing about the TIF again.
While it is an economic development tool, it is a dangerous tool. While being able to attract development, it is also prone to cause funding shortfalls at schools, deprive local government of revenue, and drive up debt to meet the needs of the potential new businesses it would attract with the improved infrastructure.
It is a sword that cuts both ways.
Adrian Engelberth
Jasper
Stories regarding Jasper’s Tax Increment Finance District.
Jasper Council approves sweeping tax increment area
Jasper’s proposed tax district creates questions and concerns
Proposed tax increment finance district encompasses majority of Jasper industry
City of Jasper publishes tax increment financing Q&A
