SPRINGFIELD, Ill. (WICS) — Economists said Springfield tax increment financing districts, or TIFs, take millions of tax dollars away from the city, county and schools in the area.
Springfield TIFs, which are sprinkled throughout the city, were created to revitalize certain areas and spur economic growth.
"There's money going to those districts that can only be spent there," University of Illinois Springfield economics instructor Glenn Cassidy said. "That means that the city and county and school districts don't have the flexibility to spend that money on something else that might be a higher priority."
The goal is to have property values in TIF districts go up.
If that happens, the increase will directly benefit that area.
For example, say a property is valued at $100 when a TIF is created. In ten years, let's say that property value doubles, hitting $200.
Property taxes on that extra $100 difference don't go to the city's general fund, it goes to the dedicated TIF fund.
"The idea behind the TIF is that the investment the city made in the TIF caused the property to rise in value," Cassidy said.
Springfield Mayor Jim Langfelder said without TIF districts, Springfield would be struggling.
Springfield's downtown TIF district is the only one in Illinois history to get legislative double-renewal approval.
He said in the last year, the downtown TIF helped fund the new Bicentennial Plaza, which increases foot traffic downtown. He said the TIF also payed for infrastructure improvements to stop flooding near the Governor's Manion.
Some wonder if these districts are actually beneficial because locking down those funds could indirectly lead to higher taxes.
"If that revenue were there, they might not have had to raise taxes as much or they could have lowered taxes," Cassidy said.
In Fiscal Year 2018, $5.6 million dollars of property tax revenue got diverted to Springfield TIF funds.
Since Springfield's active TIF districts were created, a total of $111 million has been diverted.
"People treat it like it's free money," Cassidy said. "Like it's money because of economic development that happened there, but that includes just general inflation for property values in the area. The city could always decide that this project is worth a million dollars and take it out of general city funds."
Langfelder said economic development spurred by TIFs not only benefit a specific area of the city, he said once the economy picks up in that district, it'll bring in more tax dollars.
Some studies though, show that may not be the case.
"Does it really make a difference in economic development?" Cassidy said. "Data seems to question that. And then in practice, it looks liek the city often spends money on things they would not have spent money on otherwise."