There’s growing pressure for Iowa lawmakers to take steps that’ll keep city officials from creating special tax districts to spur economic development. The areas are called Tax Increment Financing Districts, and the property taxes generated by new development in those areas are used as collateral to borrow money for public facilities like sewers and streets. Critics like the Farm Bureau say because the property taxes paid in those districts don’t go for things like schools, so city officials are raising taxes on other property owners, without putting the issue to a vote A recent analysis found there’s more than one-and-a-half billion dollars tied in up these special tax districts, and Peter Fisher of the Iowa Public Policy Project says it’s time for a moratorium to keep local officials from creating any more of these special property tax zones. He says it’s gotten out of hand with the way they’ve been used as a device to shift tax burdens and avoid tax referendums. Fisher says cities shouldn’t be using this gimmick to pay for development around retail centers. Fisher says there’s no need to “entice” retailers with property tax incentives because malls and shopping centers go where the businesses think there’s a market. Joe Johnson of the Iowa Farm Bureau says one of their biggest beefs is that these specially-created districts often shift the tax burden onto taxpayers who didn’t elect the city officials who made the decision. Johnson says the Farm Bureau is working with legislators to come up with ways to reform the tax increment financing system.
