Leader Blues

Wednesday, April 13, 2005

EDITORIAL>> Gathering at the trough

Tax-increment financing, the commercial developer’s fantasy, has given new meaning to the term “feeding frenzy.” Since the legislature moved to put teeth into the constitutional amendment that allowed the creation of the TIF districts, developers in every booming city in Arkansas have put on the feed bag.

Arkansas Business recounts plans by the city of Paragould to create a TIF district to build a new movie theater complex.

The three Malco theaters up there seem not to have kept pace with moviegoers’ needs, so your schools at Jacksonville, Cabot, Beebe — wherever — will hand over some of their local property tax money for the next 25 years to enhance the moviegoing experience of the people in Greene County.

They will surrender the money, that is, if Gov. Huckabee signs the new TIF legislation into law.

That seems now to be foregone. One of the big proponents and beneficiaries of the TIF law is Bruce Burrow, a major developer who wants to use it to build shopping malls. His real estate company also has a hand in the Paragould development.

Burrow, a major supporter of the governor, serves on the state Economic Development Commission under appointment by Huckabee, and his wife is a Huckabee appointee to the state Board of Education.

With the critical support of Jonesboro lawmakers, the bill specifying how cities can take advantage of the TIF option sailed through the legislature in its final days. The House of Representatives put the finishing touches on it Tuesday by a vote of 74-16.

TIF works this way: A city council or a county quorum court creates a special development district and issues bonds to pay for improvements paving the way for a shopping mall, restaurants, an office building or, in Paragould’s case, a theater complex.

Revenues from property taxes in the district will then be frozen for the life of the bonds, typically 25 years, and all the year-to-year growth in tax receipts from rising real estate values and new property will be siphoned from the schools and libraries to pay off the bonds.

The bill exempts certain tax recipients — community colleges and police and firemen’s pension funds, notably — from losing their rising tax receipts.
There is special perversity to this special-interest act. The original premise of TIF, when it was presented to voters in 2002, was that it would stimulate economic development in depressed communities.

The local schools might suffer flat revenues for a year or two, the theory went, but the economic growth from the investment would erase the deficit soon enough.

It really made little sense then but it turns out to have precisely the opposite effect.

No one should be surprised that the only places where TIF is being proposed are the prosperous cities, where there is a ready and even booming market for investment. So the big users at the outset will be Rogers, Fayetteville, Bentonville, Jonesboro, Paragould and perhaps North Little Rock, which wants to make it easy for an out-of-state sporting goods giant to build in the wetlands off Interstate 40 and drive out existing merchants, who won’t get the big public subsidy.

Yet the poor regions — the starved school districts of the Delta and south Arkansas — will get to pay for the improvements.

They are the schools that the Arkansas Supreme Court says the state is obliged to help if it is to meet its obligation under the state Constitution to provide a good and equal education to every child.

Owing to the strange twists of our Constitution, the money coming out of a local school’s budget to pay for the local development will be reimbursed from the state Public School Fund.

It means that every school child in Arkansas and every property owner will be tapped to subsidize the developers’ dreams.

Do we have a great government or what?