Soon, Tax Increment Financing (TIF) may claim another win. And when that happens, taxpayers can claim a loss. Kansas City officials are considering a TIF in the Liberty School District, less than a year after district residents voted down a 43-cent property tax increase. As I have pointed out, the Liberty superintendent claimed that previous TIF projects amplified the school’s need for a tax increase. It is safe to conclude that if the new TIF is approved, it will magnify the school district’s desire for a tax increase.
TIF allows developers to freeze taxes and invest any increase in property tax value that otherwise would go toward taxes into property development instead. Essentially, TIF costs taxing districts property tax revenue. For entities that do not rely heavily on property taxes, such as cities, TIF is not a big deal. But for taxing entities that rely heavily on property taxes, such as schools, TIF can be quite detrimental. If the TIF project in Kansas City moves forward, it could drive another vote for a property tax increase, and next time, the tax increase might not be rejected.