TIF moratorium
Marathon County has too many Tax Incremental Districts (TIDs). It has too much property in those districts. A county-wide moratorium is in order.
We make this call following Thursday’s report by Tom Pfotenhauer, a Department of Revenue property assessment specialist, who told the Westerns Marathon County Towns and Villages Association in the Stettin town hall that the county’s 37 TIDs in 2021 were worth $1.5 billion.
This is too much, far too much. State law prohibits any municipality from creating a new TID if its current TIDs are worth more than 12 percent of its tax base but the county’s TIDs represent 20 percent of the combined $7.53 billion property value of all of Marathon County’s cities and villages.
A correction must be made. A ban on new TIDs is needed until the value of village and city TIDs slip under the 12 percent cap.
Here’s how a moratorium will work. Representatives of the county, Northcentral Technical College and local K-12 school district need to band together as an anti-TID majority voting bloc on any Joint Review Board (JRB) that would consider creating a new TID. Local municipalities will always supply two JRB votes for a TID, but a 3-2 majority will keep the moratorium in place.
State law gives the JRB power either to approve or deny a proposed TID. State law lists three criteria for JRB members to consider when evaluating a TID. A third criteria is critical for a moratorium: Whether the benefits of the proposal outweigh the anticipated tax increments to be paid by the owners of property in the overlying taxing districts.
We say that county, K-12 school and tech school representatives on the JRB should vote no on any new TID because the benefits will not outweigh the costs. These days, county, tech school and K-12 institutions need tax base to pay for government services, not to subsidize more development during a labor shortage.
The proponents of TIF like to promise future tax bonanzas based on projected growth. But let’s talk, for once, about the here and now. If TIDs in Marathon County were at 12 percent of the value of cities and villages, not 20 percent, it would mean adding $622 million of property to the county’s tax base. At this year’s county property tax mil rate, this added tax base would generate another $2,833,325 in county taxes with no additional tax increases on county homeowners or farmers. This is money the county board could use for highway repair, sheriff’s department dispatch, social services, a drug court, building maintenance or county park enhancements.
K-12 schools would see a benefit in a TID moratorium, too. The TID ban would lower mil rates, making it easier to go to referendum for revenue cap increases.
The cost of not approving a moratorium is watching the percent of property in TID continue to grow. New TIDs will finance development, including streets and utilities, but they won’t generate the taxes needed to maintain these things for as long as 37 years.
The first step towards a moratorium is for county, tech school and K-12 school officials to call a meeting and agree to jointly pay for a study that would document Tax Incremental Financing’s (TIF) impact on local government services. This would give an anti-TID voting bloc something to wave about at future JRB meetings.
Ideally, the Department of Revenue would enforce the state’s 12 percent cap on TIDs. But their enforcement priorities are elsewhere. This means it is up to local officials to pull the reins up on TIF, protect their tax base and the financial interests of taxpayers.
