DES MOINES, Iowa (AP) — Iowa lawmakers considered changes Tuesday to an economic development tool used for decades in some cities and counties that critics have alleged is unfairly relocating jobs from one community to another.
Members of the Senate's Ways and Means Committee, which oversees tax policy, is considering whether to overhaul the tax increment financing system (TIF), in which future tax revenue is dedicated to infrastructure work.
Some lawmakers say the practice, established in 1969, has been crucial to redeveloping urban areas. Others argue it's being misused.
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Committee Chairman Joe Bolkcom, D-Iowa City, said millions of dollars in TIF incentives enticed a retailer in his community to move to neighboring Coralville. He called that "piracy."
"There might be a few more jobs created by this move but essentially we're just moving jobs from one town to the next at a fairly substantial cost to taxpayers," Bolkcom said.
Bolkcom also noted some entire cities are TIF areas and others have used the tool to pay for public facilities.
House Ways and Means Committee Chairman Thomas Sands, R-Wapello, agreed the original intent of the legislation — to spark growth and improve blighted areas — has been lost in some instances.
But other lawmakers said TIF has been critical for development in their communities. Sen. Matt McCoy, D-Des Moines, said the downtown core of the state's largest city wouldn't have undergone recent improvements without it.
More than $283 million in tax revenue in the fiscal year ending June 30 will go to pay back improvements. That includes $121.1 million for schools, $46.8 million of which is backfilled by the state. And taxpayers in cities that relied heavily on TIF over the past decade have seen their local tax races increase more rapidly than the statewide average.
"They may be paying for their own development, but someone else is paying for their services," said Sen. Herman Quirmbach, D-Ames.
Bolkcom and Sands expressed optimism there would be a bipartisan agreement on TIF legislation. One proposal would limit the manner and duration of the practice and strengthen reporting requirements.
"I think there's a lot of different ways the law can be improved and done so in a way that reflects largely what a lot of cities are doing now," Sands said.
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