Sunday, January 21, 2007

Last week, Reclaim Democracy released a report on Kansas City's Tax-Increment Financing program, also known as TIF. The report was put together UMKC economics professor Michael P. Kelsay, Ph.D., who did an outstanding job.

While it raised a lot of the same issues I raised in my work as City Auditor, it also revealed for the first time, in stark statistical fact, the social and economic injustice associated with Kansas City's use of TIF.

Though TIF was originally created to help revitalize areas of the city that are struggling economically, Kelsay's report stated that:
88% of TIF plans are in four Council Districts (1, 2, 4, and 6) which contain the two-thirds of the city’s population who are the most affluent, best educated and least likely to be members of a minority group.

The two Council Districts (3 and 5) with one-third of the population who have the lowest income and the highest rates of poverty and unemployment receive only 12% of TIFs.

This was something that I never directly confronted as City Auditor because I didn't realize how bad it had gotten until the very end of my career. Now it's blatantly obvious that TIF has been used almost exclusively to line the pockets of insiders under the guise of "economic development."

Two weeks ago, when I went to City Hall to testify against yet another one of these TIF plans -- this one for one of the wealthiest and most vibrant areas of the city -- I told Channel 9 Reporter Michael Mahoney that TIF is not doing what the Mayor and current City Council claim. They say that this kind of "economic development" is essential to the effort to bring more revenue into the city, revenue that can be used to offer good basic services to regular folks like you and me. But, as I said to Mahoney, "Sales tax is flat."

See for yourself:




So here we are, supposedly pumping up our economy with retail TIFs, when, in fact, there is no growth in sales tax revenues. Indeed, they're actually declining when adjusted for inflation. What's more, we are losing population as a proportion of the metropolitan area.

Looking at this, I believe that any reasonably intelligent person would conclude that the TIF process has NOT worked to provide "economic development."

4 comments:

Adam said...

Mark,

What would be your preferred course of action with TIF? Do you think that there's a way to use TIF or other property-tax incentives to boost sales-tax revenue, or should people just stop thinking of it as a source of future revenue (recognizing that it could still have utility for other reasons)?

snoble58 said...

Interesting that the decline in sales tax revenue (in real terms) is before sales taxes are redirected to TIF.

TIF is supposed to be a way to fund public infrastructure in blighted areas, but KC redirects taxes dedicated to public transportation and capital maintenance to fund developers and their attorneys.

Mark said...

Adam,

As I said at the Mayoral candidate forum in the Northland, I view TIF as something like chemotherapy. It is an effective remedy to used in very targeted areas. If abused, it can be dangerous.

My plan is to first of all establish a policy to direct the use of TIF, which the city currently does not have. This will be a policy for the WHOLE city, not just a small circle of insiders. In other words, I want regular folks to be part of the process in devising a policy. That's because TIF needs to be a tool that the people of Kansas City feel confident in, one they know is being used with their best interests in mind. That's not happening right now.

The Underdog said...

I was surprised when I found out that TIF monies where being used on developments in the Plaza. It seems that whoever is approving these projects is forgetting that there are several communities in KC that could benefit from redevelopment. It's a shame that those that have benefit from public dollars while the have nots continue further into dispair.