TIF projects could be subject to legislative oversight

Projects that utilize tax increment financing (TIF) would be subject to oversight by the Legislature under a bill heard Feb. 5 by the Executive Board.

LB1102, introduced by Hyannis Sen. Al Davis, would add TIF projects to the definition of an agency for purposes of the Legislative Performance Audit Act. The change would allow the Legislative Performance Audit Committee to conduct performance audits on such projects.

Davis said TIF projects, while local in scope, have statewide implications for school funding and tax revenues. As a result, he said, there should be a mechanism for statewide evaluation of whether community development law functions as the Legislature intended.

“The law was put in place to help deal with blighted properties,” Davis said. “It isn’t used in that way across the state anymore.”

Renee Fry, executive director of OpenSky Policy Institute, testified in support of the proposal.

Nebraska currently loses approximately $25 million in tax revenue to TIF annually, she said, yet research suggests that TIF does not function as an economic development tool as was intended. Instead, Fry said, development simply is moved from one location to another.

“We do believe that is important to have a much broader look at these programs and see if they are, in fact, a good investment of taxpayer dollars,” she said.

Tom Huston, testifying on behalf of the Lincoln and Nebraska chambers of commerce, opposed the bill, citing concerns that it could slow development. TIF also is used by cities for infrastructure costs on important urban renewal projects, he said.

“There are many protections built into the community development law that cities are observing and [that] protect the public interest,” Huston said. “I think TIF is unfairly vilified.”

The committee took no immediate action on the bill.