TIF for tat.

• Author: O'Toole, Randal
• Position: POLITICAL LANDSCAPE - Tax increment financing

WHEN JERRY BROWN took office for the second time as governor of California earlier this year, the first thing he did was propose to eliminate the state's 400 urban redevelopment agencies. Run by the cities--and, in a few cases, countries--these agencies siphoned $5,700,000,000 away from schools and other tax entities into municipal coffers in 2009. Brown suggested that eliminating the agencies would be a major step toward helping the state close its $28,000,000,000 deficit.

Brown intimately is familiar with redevelopment agencies: as the mayor of Oakland (1999-2007), he had doubled the size of the city's redevelopment districts. Although redevelopment funds legally are dedicated to fighting blight and promoting economic development, the Los Angeles Times notes that cities often use them "as emergency ATMs to pay for core services, including police, fire, and code enforcement, and sometimes the mayor's salary." Indeed, 15% of Brown's pay when he was Oakland's mayor came from the city's redevelopment agency.

In California and 48 other states, most urban redevelopment is paid for using tax increment financing (TIF), a taxing method invented by the California legislature in 1952. TIF uses the property (and sometimes sales or income) taxes collected from new developments to subsidize those very developments. It also is a way for dries to enhance their budgets at the expense of schools and other government entities. Redevelopment "seemed kind of magical," Brown himself staled when mayor of Oakland. "It was the way you could spend on stuff that they wouldn't otherwise let you."

More than three out of four California cities and nearly one-third of its counties use TIF. Moreover, TIF is growing rapidly outside of the Golden State. From 1990-95, U.S. cities sold $10,200,000,000 worth of bonds backed by TIE more than 80% of which was for California. In the late 2000s, cities sold nearly $20,000,000,000 worth of TIF bonds, and California's share had declined to less than 64%. While California TIF bonds grew by 55%, TIF bonds in other states swelled by 260%.

TIF has become a popular way to subsidize all sorts of private developments, ranging from residential subdivisions to shopping malls and from streetcar lines to sports stadiums. The wide variety of ways TIF funds are spent is illustrated by the following news items that appeared in just one month in 2010:

* Belleville, Ill., gave a car dealer $152,000 in TIF money "to help the dealership reinstate...