Just released: Tax Increment Financing in Southeastern Wisconsin

The following is from the Public Policy Forum’s new report, "Tax Increment Financing in Southeastern Wisconsin." Research was funded by Briggs & Stratton, Ehlers and Associates, Irgens Development Partners, and Reinhart Boerner Van Deuren S.C.

Tax Increment Financing (TIF) is southeastern Wisconsin’s largest economic development tool. With 176 TIF districts and $8.4 billion in property value, the collective tax base devoted to TIF districts in our region ranks behind only the city of Milwaukee among our region’s largest tax bases.

Despite the impressive scale of TIF in the seven-county area, the tool is used less here than in the rest of the state. Whether that’s due to reluctance or lack of need is unclear. What is clear is that if the region decides that it can become more aggressive with TIF, it has ample capacity to do that. It’s critical that we know where this capacity exists and how best TIF can be deployed to shape the region’s future growth. After all, economic development needs finance.

The use of TIF is growing in our region. There were 56 municipalities using it in southeastern Wisconsin in 2007 - up from 51 in 2000. Today, a quarter of the 56 municipalities are “TIF’d out” - communities that can no longer approve new TIF districts because the value in their existing districts exceeds the state limit.

TIF use in the city of Milwaukee has increased in tandem with the rest of the state and region despite the successful retirement of three large TIF districts in 2006. While the city’s use of the tool continues to trail regional and state averages, Milwaukee has increased TIF expenditures under Mayor Tom Barrett’s administration.

As TIF use increases in Wisconsin, so too will the public’s scrutiny of this popular development tool. Municipalities in our region could benefit from implementing the following “best practices” aimed at ensuring the strategic, accountable, and efficient use of TIF:

• Use TIF to build community partnerships - More can be done to educate and engage the public during the TIF approval process.


• Establish developer need, not want - Strong due diligence of incoming TIF proposals is needed to ensure their efficient use.


• Align TIF use with community goals - Municipalities should use TIF to fulfill goals within an economic development plan.


• Monitor and report TIF performance - The accomplishments (and failures) of the region’s 174 TIF districts should be readily available to the public.


• Use TIF to compete globally - TIF could play a central role in strengthening the region’s competitive position.

To succeed in the new global economy, our region must utilize every tool at its disposal. In Wisconsin, TIF emerges as one of the most important instruments that can grow our economy and improve our quality of life.

Much work is needed to ensure the strategic, accountable, and efficient use of TIF in our region, but if we can learn to better use TIF can we also learn to use it more often?