Columns » Max Brantley

Something for nothing

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There’s been news the last few days on tax increment finance (TIF). Tax increment financing is a tool put in state law to freeze property taxes in “redevelopment districts” at existing levels for the normal tax recipients and then divert any tax increases on property in the districts to infrastructure improvements. I put “redevelopment districts” in quotes because the rush to use TIF in Arkansas has almost exclusively been to support new construction in wealthy places — Rogers, Jonesboro, western Little Rock, etc. Virtually no blighted area was to be redeveloped. Then Attorney General Mike Beebe said that state-mandated minimum school property taxes could not be captured to support TIF districts. That put the brakes on tens of millions worth of bonds to subsidize development of greenfield sites. Up in Northwest Arkansas, developers are feverishly looking for alternatives. Last weekend, the Bentonville-Bella Vista Chamber of Commerce heard of possible legislation to work around the attorney general’s opinion. Though not yet filed, it has one of those clever misleading labels — jobs infrastructure finance district. If you’re against this, the shorthand goes, you’re against jobs. A JIF district would divert sales and income taxes, instead of property taxes, from a geographic area. It’s still the same old corporate welfare for private developers. At least this scheme wouldn’t rob money from schools directly. But the effect is the same. It would divert state sales and income taxes to local projects. That’s not the purpose of state taxes. They’re supposed to go into a single pot to be distributed democratically statewide. Northwest Arkansas keeps scheming to find ways to take state tax money because there’s such a great resistance to taxes in Republicanland. Benton County, Rogers and Bentonville have many existing ways to raise money — local sales, property and improvement district taxes. But they don’t think voters would approve. Better to take money from the rest of us, without an election, through legislative sleight-of-hand. We hope the legislature will see this for what it is — another plan to diminish money available statewide for schools to improve huge swaths of the most valuable property in Arkansas. The JIF idea demolishes even a pretense of the trickle-down prosperity promised by TIF districts. The projects helped by the JIF welfare payments wouldn’t contribute more sales and income taxes to the rest of the state because those taxes would be captured for local improvements. Also last week, the Louisiana Supreme Court provided a blindingly simple template to defeat anyone who goes to court to breathe life into TIF schemes in Arkansas. In invalidating a TIF project in Denham Springs for a Bass Pro Shops, the court said “once citizens vote for a tax dedicated to one purpose, the tax cannot be used for a purpose other than that approved by the citizens.” At least not without a vote. Some think this legal reasoning can be applied in Arkansas. I don’t know the legal ins and outs, but the TIF districts here are designed to do exactly what the Louisiana court has prohibited — take taxes voters had approved specifically for schools to build streets for golf course communities and for high-dollar shopping centers.

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