Economic Development Economic Development in Hard Times: TIFs, in Hard Times: TIFs,

CAPCOs, and Other Bad CAPCOs, and Other Bad IdeasIdeas

Greg LeRoyGreg LeRoy

Good Jobs FirstGood Jobs First

EARN ConferenceEARN Conference

September 13, 2011 ~ MilwaukeeSeptember 13, 2011 ~ Milwaukee

Your Power-PanelistsYour Power-Panelists Julia Sass Rubin of the Bloustein Julia Sass Rubin of the Bloustein

School at Rutgers School at Rutgers

Deborah Howlett of New Jersey Policy Deborah Howlett of New Jersey Policy PerspectivePerspective

Kathy White of the Colorado Fiscal Kathy White of the Colorado Fiscal Policy InstitutePolicy Institute

Greg LeRoy of Good Jobs First Greg LeRoy of Good Jobs First (moderator)(moderator)

$70 Billion per Year!$70 Billion per Year! Property Tax AbatementsProperty Tax Abatements TIF: Diversion of Property and Sales TaxTIF: Diversion of Property and Sales Tax Corporate Income Tax Credits Corporate Income Tax Credits Sales Tax Exemptions Sales Tax Exemptions Enterprise Zones Enterprise Zones Land Write-downsLand Write-downs Infrastructure Aid Infrastructure Aid CAPCOs CAPCOs

Definition of Tax Definition of Tax Increment FinancingIncrement Financing (TIF (TIF

)) A diversion of the future growth (the A diversion of the future growth (the

“increment”) in one or more tax “increment”) in one or more tax revenue streams within a revenue streams within a geographically defined “TIF district” geographically defined “TIF district”

To subsidize (re)development in the To subsidize (re)development in the districtdistrict

Originally enacted to reverse physical Originally enacted to reverse physical “blight,” but often since perverted“blight,” but often since perverted

Our Theory of Change:Our Theory of Change:Dormant Public PowerDormant Public Power

To create good jobs and reduce poverty To create good jobs and reduce poverty

To grow a stronger, fairer tax baseTo grow a stronger, fairer tax base

To engage taxpayers in local economies To engage taxpayers in local economies

To strengthen local businesses, foster To strengthen local businesses, foster entrepreneurial cultureentrepreneurial culture

To curb sprawl and global warmingTo curb sprawl and global warming

Site Location 101Site Location 101 Business basics matter (not tax Business basics matter (not tax

breaks)breaks)

Public officials in “prisoners’ Public officials in “prisoners’ dilemma”dilemma”

““Job blackmail,” “Economic war Job blackmail,” “Economic war among the states” (and suburbs) among the states” (and suburbs)

Unregulated site location consultantsUnregulated site location consultants

Problem #1Problem #1

Popular Popular Economic Economic

MiseducationMiseducation

Problem #2Problem #2

Too much retailToo much retail

Problem #3 Problem #3

Too Too

little little greengreen

Problem #4 Problem #4

Fuel Fuel

for for

sprawlsprawl

Problem #5Problem #5

Subsidized Shops Running AwaySubsidized Shops Running Away

Problem #6Problem #6

Lack of Lack of coordinatiocoordinatio

n with n with transit and transit and job trainingjob training

Problem Problem #7#7

Covert Covert budget budget erosionerosion

Problem #8Problem #8

Bias against Bias against small, local entrepreneurssmall, local entrepreneurs

Reform #1: Disclosure!Reform #1: Disclosure!

Annual, company-specific reporting Annual, company-specific reporting of the deal (costs) and outcomes of the deal (costs) and outcomes (benefits) (benefits)

On the WebOn the Web, accessible, searchable, , accessible, searchable, downloadabledownloadable

Time for a Report Card! Time for a Report Card!

Show Us the SubsidiesShow Us the Subsidies 51-State “report card” on major-51-State “report card” on major-

program disclosure: company names, program disclosure: company names, dollars, jobs, wages, address – and dollars, jobs, wages, address – and outcomesoutcomes

Only two states get a “B” (many still Only two states get a “B” (many still fail to report outcomes)fail to report outcomes)

13 states plus D.C. still in the 13 states plus D.C. still in the Dark AgesDark Ages

Solution #2: Solution #2: Location EfficiencyLocation Efficiency

In areas with transit, no In areas with transit, no subsidies unless the worksite subsidies unless the worksite is served by public is served by public transportationtransportation

Solution #3: “Green Solution #3: “Green Strings”Strings”

No new subsidies, no renewal of No new subsidies, no renewal of subsidies for dirty commercial-subsidies for dirty commercial-industrial buildingsindustrial buildings

E.g., no abatements for office E.g., no abatements for office buildings w/o LEED or LEED-EBbuildings w/o LEED or LEED-EB

E.g., no tax credits for factories w/o E.g., no tax credits for factories w/o clean production systemsclean production systems

Solution #5: Reduce Solution #5: Reduce and Target Retail and Target Retail

SubsidiesSubsidiesLimit strictly to areas such as Limit strictly to areas such as

“food deserts” that truly lack “food deserts” that truly lack basic retail amenitiesbasic retail amenities

Solution #6: Solution #6: ClawbacksClawbacks

““Money-back guarantee” that Money-back guarantee” that provides for repayment of all or a provides for repayment of all or a prorated share of a subsidy if a prorated share of a subsidy if a company fails to deliver jobs and/or company fails to deliver jobs and/or other community benefits in a other community benefits in a reasonable period of timereasonable period of time

Related safeguards: rescissions and Related safeguards: rescissions and recalibrationsrecalibrations

Solution #4: Priority Solution #4: Priority Shift to Small Shift to Small BusinessesBusinesses

Reduce subsidies to sectors/ Reduce subsidies to sectors/ companies with best access to companies with best access to credit marketscredit markets

Increase subsidies to small Increase subsidies to small businesses most hurt by credit businesses most hurt by credit squeezesqueeze

Solution #7: Unified Solution #7: Unified Development BudgetDevelopment Budget

Annual report to legislature Annual report to legislature itemizing all forms of spending itemizing all forms of spending for jobsfor jobs

Purpose: treat all forms of Purpose: treat all forms of spending fairly, including tax spending fairly, including tax expendituresexpenditures

2011-2012: A Perfect 2011-2012: A Perfect StormStorm

State revenues still depressedState revenues still depressed

No more stimulus reliefNo more stimulus relief

Jobs issue highly politicizedJobs issue highly politicized

Rising taxpayer expectations re: Rising taxpayer expectations re: government transparencygovernment transparency

Fightback ToolkitFightback Toolkit Accountable USAAccountable USA

Show Us the SubsidiesShow Us the Subsidies

Subsidy TrackerSubsidy Tracker

Public-Private Power Public-Private Power Grab Grab

Accountable USAAccountable USA51 state web 51 state web pagespages

One-stop shopping One-stop shopping for scamsfor scams

Case studiesCase studies

Big GiveawaysBig Giveaways

Links to alliesLinks to allies

Big Giveaway IndexBig Giveaway Index Passive Investment CompaniesPassive Investment Companies

Single Sales FactorSingle Sales Factor

Film/Media Production SubsidiesFilm/Media Production Subsidies

TIF – Tax Increment FinancingTIF – Tax Increment Financing

Unregulated Site Location Unregulated Site Location Consultants Consultants

Subsidy TrackerSubsidy Tracker

First-ever searchable national First-ever searchable national database of company-specific database of company-specific

subsidy datasubsidy data

Public-Private Power Public-Private Power GrabGrab

Ohio, Wisconsin, Iowa and Ohio, Wisconsin, Iowa and Arizona privatizing economic Arizona privatizing economic developmentdevelopment

20 years of troubled history20 years of troubled history

Over-Arching MessageOver-Arching Message

““At a time when state At a time when state governments must make governments must make difficult budget decisions, difficult budget decisions, spending to create jobs spending to create jobs should be transparent, fair should be transparent, fair and effective.”and effective.”

ContactContact

Greg LeRoyGreg LeRoy

Executive DirectorExecutive Director

Good Jobs FirstGood Jobs First

goodjobs@goodjobsfirst.orggoodjobs@goodjobsfirst.org

www.goodjobsfirst.orgwww.goodjobsfirst.org

202-232-1616 x 211202-232-1616 x 211