Ask an Official: City and MAPS admin discuss TIF impact on schools
This week’s featured question reads:
“I heard a rumor recently that the city’s TIDs are hurting our school district, is this true? If so, how? I’m still new to understanding how these things work and don’t really understand how the money from them is spent or figured. It sounds like there is a lot of money in them which could really help our schools too! If the answer is no, any more information would be nice. Thank you”
Answers as given by MAPS Superintendent Dr. John Sample and Merrill City Administrator Dave Johnson:
“A TID does not impact a district’s total levy, which is determined by revenue limits. The state’s general equalization aid formula for school district’s does take into consideration the amount of property a school district has in TIDs and makes adjustments accordingly.” Dr, Sample said.
“TID and TIF are often confusing for citizens,” added City Administrator Johnson
“A Tax Increment District is a geographical area while Tax Increment Financing is a funding mechanism. Tax Incremental Financing (TIF) is an economic development tool used by Wisconsin cities to leverage private development investment. Tax Increment Financing uses the increase in property tax revenue resulting from new development to finance development costs, such as land acquisition, site preparation, structures, or public infrastructure (streets, sewer, water, or parking facilities). As an example, if an existing business is paying $5,000 in property taxes on a vacant parcel and through development of the existing parcel, using a TIF incentive, increases the value of the property to the point that the property taxes are now $75,000, the $70,000 difference above the original base is the tax increment. This tax increment is the amount that would then be available annually throughout the life of the TID to invest in other development projects.
“Since the City of Merrill is not the sole recipient of local property taxes it takes the agreement of all four local taxing entities to create or amend a Tax Increment District, these are the City of Merrill, MAPS, Lincoln County, and North Central Technical College. What this means is that as the city and/or the developer make improvements in the district, property values (and the accompanying taxes) increase, benefitting all four taxing entities. When the life of the TID has expired, all four taxing entities will begin to receive their appropriate share of the increased property tax revenue, which are monies they would not have received if TIF funding of development had not occurred.
“TIF is not new, the first TIF was used in California in 1952. The Wisconsin Legislature approved the use of TIF in 1975, By 2004, all 50 States had authorized the use of TIF.”
Have a question or concern you would like to address? Simply send your question or concern to firstname.lastname@example.org along with an indication of which entity your question or concern pertains to. Current participants are the Merrill Police Department, Merrill Fire Department, Tomahawk Police Department, Lincoln County Administrative Coordinator Randy Scholz, Merrill City Administrator Dave Johnson, Merrill Area Housing Authority Director Paul Russell and merrill area public schools (MAPS) superintendent Dr. John Sample. Please note: Those who submit to the ‘Ask an Official’ feature remain anonymous.