The curtain ripped open
Let’s recall the classic scene from America’s favorite movie, “The Wizard of Oz.” Dorothy, holding the broomstick of the Wicked Witch of the West, calls on the Wizard of Oz to make good on his pledge and return her to Kansas. Hearing the request, the Wizard has a fit and fills his imperial chamber with electric sparks and billowing smoke. Dorothy’s dog, Toto, pulls back a green, velvet curtain to reveal the very unwizardly shape of a gray haired old man putting on a theatrical production. The con is over. The illusion is revealed.
We remember this famous movie scene following the Edgar Village Board meeting on Monday where administrator Jennifer Lopez announced a grievous error in the village’s Tax Incremental Finance (TIF) program. The error is that 11 years of property taxes paid by B& D Fabricators, the village’s only industry in its business park, did not go into its TIF fund, but, instead, got paid out to the normal recipients, the county, K-12 school and tech school. The village likely lost hundreds of thousands of dollars.
Generally, TIF is the land of wizards. It is where expert consultants and accountants put together complicated, difficult to understand plans for business development and growth. The process of Tax Increment District (TID) creation is itself a wondrous mystery with public hearings, official paperwork, financial projections and lots of inspiring talk about growth and wealth and progress.
The whole process is so intimidating that regular citizens, like Dorothy, feel their knees knock together at the mere thought of questioning the TIF wizards.
The tax error described by Lopez, which likely took place back in 2004, pulled the curtain on the whole mularkey.
What we now see is a process not where taxpayers benefit from glorious, new growth without spending a dime extra but where taxpayers pay for TIF economic development, just like they pay for any other village service, i.e. roads, sewer, water and garbage removal.
This will be painfully obvious in December 2020. Village taxpayers, according to Lopez, will pay a TIF property tax surcharge as part of a Department of Revenue (DOR) program to make up a fraction of the total loss. Edgar taxpayers will soon know the real cost of TID.
What all this tells us is that TIF should stop being a mystery guarded by village administrators, engineers, accountants, attorneys and consultants.
Yank down the curtain. TIF must be transparent to all taxpayers.
With this goal in mind, we propose the Village of Edgar and, frankly, every municipality with TIF, publish an annual report that details TID revenues and expenditures, progress towards TID plan goals and how much money is owed both to commercial banks and to municipal general funds. This report must be citizen-friendly. It needs to be simple and straightforward, devoid of jargon and legalese.
We believe that such a report could have alerted either the Edgar Village Board, a series of administrators or several auditors to the error that lay undetected in the village’s TID No. 3 plan for years and years.
Recently, the DOR has tried to amp up local control of TIF, requiring the Joint Review Board (JRB) for any Tax Increment District to meet annually and review financials. This reform is too weak. The JRB will never review TIF financials like a village board or plain citizens would. They are, after all, not on the hook for making good on a TID mistake.
No, we have to change TIF culture itself. We have to bring it down to the level of the people. And why? It is the people who have to pay the bill when the professionals mess up a TID.
Dorothy was able to get her wish by clicking together her shoe heels three times.
Nice trick, but that likely won’t work to fix Edgar’s TID No. 3. Instead, Edgar’s taxpayers will write bigger checks next December to make things as right as state law permits.
Let’s not waste this error, however. Edgar’s misfortune should be a catalyst for all municipalities to make TIF transparent.