The Impact of a TIF on the Auburn School District. A General Overview

Transcription

1 The Impact of a TIF on the Auburn School District A General Overview

2 Terms TIF GSA EAV. Tax Increment Funding Money generated through freezing the local revenue of taxing bodies for 23 years. This fund is designated to the city for development and infrastructure. General State Aide Money from the State of Illinois given to schools that can not produce enough local funds to educate their children. Equalized Assessed Valuation The total assessed value of all the property in the school district. It s equalized because the total value has been revised after the state multiplier has been applied.

3 Basic Concept of the School Foundation Funding Formula LOCAL REVENUE STATE AIDE

4 Impact of a TIF on Schools LOCAL TAXES STATE AIDE A TIF GIVES NO INCREASE TO LOCAL REVENUE GENERAL STATE AIDE STAYS AT THE CURRENT LEVEL

5 Impact of a TIF on Schools LOCAL TAXES STATE AIDE A TIF TRADES GROWTH IN LOCAL REVENUE FOR STATE AIDE

6 School becomes more dependent on State Aide which is PRORATED. LOCAL TAXES STATE AIDE STATE AIDE IS PRO- RATED AT 89%

7 TIF (CITY) Two Revenues; Three Funds Increased EAV LOCAL REVENUE (SCHOOL) Frozen to create the TIF STATE AIDE Prorated

8 MONEY DOESN T APPEAR or DISAPPEAR. IT CHANGES HANDS. TIF (CITY MONEY) Increased EAV LOCAL REVENUE Frozen to create the TIF STATE AIDE Prorated

9 Making Up Lost Revenue from TIF with an Intergovernmental Agreement TIF (CITY MONEY) Increased EAV LOCAL REVENUE Frozen to create the TIF STATE AIDE $.89 Prorated + $.11 TIF ALLOCATION

10 Making Up Lost Revenue from TIF with TIF an Intergovernmental Agreement SCHOOL

11 Now I Get It TIF SCHOOL

12 INTERGOVENMENTAL AGREEMENT An Intergovernmental Agreement has the potential to off-set some lost revenue from the TIF, but is impacted by the proration of GSA. TIF allocations to the school rarely compensate for the entire loss in revenue. Local dollars are frozen and GSA is prorated. Local Revenue is 100% guaranteed and on time, while State Aide is prorated and late. Dollar for dollar, GSA makes up roughly 1/3 of what is lost in local revenue. The TIF makes the schools more dependent on GSA.

13 School becomes more dependent on State Aide which is continually being LOCAL TAXES PRORATED. STATE AIDE PROPOSED PRO-RATION AT 60%

14 I ll trade you a dollar for 85 cents?

15 How about a quarter? TIF LOCAL REVENUE FOR EDUCATION

16 FOLLOW THE MONEY Which fund is actually producing the revenue fueling the TIF? A. TIF (Revenue comes from B.) B. SCHOOL S LOCAL PROPERTY TAX LEVY BASED ON EAV (Revenue is Frozen) C. THE SCHOOL S GENERAL STATE AIDE (Since B is frozen, GSA remains at the current level; not falling as EAV increases.)

17 FOLLOW THE MONEY Which fund is actually producing the revenue fueling the TIF? A. TIF (Revenue comes from B) B. SCHOOL S LOCAL PROPERTY TAX LEVY BASED ON EAV (Revenue is Frozen) C. THE SCHOOL S GENERAL STATE AIDE (Since B is frozen, GSA remains at the current level; not falling as EAV increases.)

18 FOLLOW THE MONEY TIF SCHOOL S LOCAL PROPERTY TAXES NEW REVENUE IS NOT COMING FROM EITHER OF THESE 2 FUNDS. THE TAX RATE STAYS THE SAME. THE FIGURE THAT IS BEING ADJUSTED IS THE SCHOOL S GENERAL STATE AIDE BECAUSE THE INCREASE IN THE PROPERTY VALUE IS NOT REFLECTED IN THE FORMULA.

19 THIS IS WHY THE SYSTEM IS BROKEN General State Aide STATE FUNDS DESIGNED TO GIVE FINANCIAL AIDE TO SCHOOLS The TIF DESIGNED FOR LOCAL DEVELOPMENT

20 EAV HISTORY ASSESSED A. V. EXTENSION YEAR VALUATION INCREASE % INCREASE EXTENSION % INCREASE % PTELL LIMIT TAX RATE ,742,788 2,739, % $4,268, % 1.05% ,003,005 7,088, % $4,188, % 1.03% ,914,774 5,521, % $4,043, % 1.02% ,392,847 55, % $3,820, % NA ,336,925 1,864, % $3,818, % NA $ ,471,955 1,638, % $3,216, % NA $ ,833,749 26,396, % $3,268, % NA $ ,437,124 3,800, % $2,236, % 3.4% $ ,636,163 3,262, % $2,124, % 3.3% $ ,373, , % $1,995, % 1.9% $ ,506,990 1,565, % $1,932, % 2.4% $ ,941, , % $1,852, % 1.6% $ ,720,385 2,787, % $1,851, % 3.4% $ ,932,567 3,152, % $1,747, % 2.7% $ ,780,067 3,378, % $1,665, % 1.6% $ ,401,571 3,347, % $1,596, % 1.7% $3.3676

21 THIS IS HOW MUCH WE RECEIVE EACH YEAR ASSESSED A. V. EXTENSION YEAR VALUATION INCREASE % INCREASE EXTENSION % INCREASE % PTELL LIMIT TAX RATE ,742,788 2,739, % $4,268, % 1.05% ,003,005 7,088, % $4,188, % 1.03% ,914,774 5,521, % $4,043, % 1.02% ,392,847 55, % $3,820, % NA ,336,925 1,864, % $3,818, % NA $ ,471,955 1,638, % $3,216, % NA $ ,833,749 26,396, % $3,268, % NA $ ,437,124 3,800, % $2,236, % 3.4% $ ,636,163 3,262, % $2,124, % 3.3% $ ,373, , % $1,995, % 1.9% $ ,506,990 1,565, % $1,932, % 2.4% $ ,941, , % $1,852, % 1.6% $ ,720,385 2,787, % $1,851, % 3.4% $ ,932,567 3,152, % $1,747, % 2.7% $ ,780,067 3,378, % $1,665, % 1.6% $ ,401,571 3,347, % $1,596, % 1.7% $3.3676

22 IF THE TIF PASSES, THIS NUMBER FREEZES ASSESSED A. V. EXTENSION YEAR VALUATION INCREASE % INCREASE EXTENSION % INCREASE % PTELL LIMIT TAX RATE ,742,788 2,739, % $4,268, % 1.05% ,003,005 7,088, % $4,188, % 1.03% ,914,774 5,521, % $4,043, % 1.02% ,392,847 55, % $3,820, % NA ,336,925 1,864, % $3,818, % NA $ ,471,955 1,638, % $3,216, % NA $ ,833,749 26,396, % $3,268, % NA $ ,437,124 3,800, % $2,236, % 3.4% $ ,636,163 3,262, % $2,124, % 3.3% $ ,373, , % $1,995, % 1.9% $ ,506,990 1,565, % $1,932, % 2.4% $ ,941, , % $1,852, % 1.6% $ ,720,385 2,787, % $1,851, % 3.4% $ ,932,567 3,152, % $1,747, % 2.7% $ ,780,067 3,378, % $1,665, % 1.6% $ ,401,571 3,347, % $1,596, % 1.7% $3.3676

23 General State Aide History GSA HISTORY Fiscal Year Received State Aide ,384, ,318, ,265, ,927, ,522, ,243, ,132, ,145, ,789, ,421, ,298,310 WE ARE CURRENTLY BEING FUNDED WITH A FORMULA THAT FROZE IN 2007 AND IS NOW PRORATED AT 89%

24 General State Aide History GSA HISTORY Fiscal Year Received State Aide ,384, ,318, ,265, ,927, ,522, ,243, ,132, ,145, ,789, ,421, ,298,310 MISSED / LATE PAYMENTS

25 General State Aide History GSA HISTORY Fiscal Year Received State Aide ,384, ,318, ,265, ,927, ,522, ,243, ,132, ,145, ,789, ,421, ,298,310 92% PRORATION

26 General State Aide History GSA HISTORY Fiscal Year Received State Aide ,384, ,318, ,265, ,927, ,522, ,243, ,132, ,145, ,789, ,421, ,298,310 89% PRORATION

27 General State Aide History GSA HISTORY Fiscal Year Received State Aide ,384, ,318, ,265, ,927, ,522, ,243, ,132, ,145, ,789, ,421, ,298,310 ANOTHER 89% PRORATION

28 IF THE TIF PASSES GSA HISTORY Fiscal Year Received State Aide ,384, ,318, ,265, ,927, ,522, ,243, ,132, ,145, ,789, ,421, ,298,310 AND IT IS PREDICTED THAT IT WILL BE PRORATED 60%! THAT S A $1,865,055 CUT IN REVENUE!

29 IF THE TIF PASSES GSA HISTORY Fiscal Year Received State Aide ,384, ,318, ,265, ,927, ,522, ,243, ,132, ,145, ,789, ,421, ,298,310 THIS IS THE FUND WE WOULD BE RELYING ON

30 As property values increase from the same acre, the TIF formula is the same

31 INDUSTRY or RESIDENTIAL or COMMERCIAL but there are hidden costs

32 A RESIDENTIAL TIF IMPACTS SCHOOL EXPENDITURES The property taxes of a new home in a TIF are going to the TIF, not the school.

33 The operational expenditure per student per year is about $7,000 with a TIF, there is no new revenue.

34 The Larger the TIF area, the Greater Potential for the School District to Lose Significant Funding

35 THE SCHOOL HAS THREE MAIN SOURCES OF REVENUE: * Federal Dollars Reduced by $1.1 mil since 2011 * State Dollars Prorated 89% = $2million and counting; funding at 2007 levels * Local Tax Dollars A TIF would cut local revenue growth

36 AS A RESULT IF THE CITY OF AUBURN CREATES A TIF DISTRICT BECAUSE WE HAVE NO OTHER STABLE REVENUE AND BECAUSE WE ARE SO DEPENDENT ON GSA; WHICH IS PRORATED

37 FROM EVERY FIGURE VIEWED FROM EVERY ANGLE

38 the school district will be financially crippled at historic levels from a TIF.

39 resulting in: more cuts larger class sizes fewer electives / cut activities higher local property taxes (as a result of needed bond sales) and a deeper, more serious financial crisis. COMPOUNDING FOR THE NEXT 23 YEARS.

40 Review LOCAL REVENUE IS 100% Guaranteed STATE AIDE IS NOT Guaranteed and IS PRORATED and WILL NOT REPLACE THE LOSS OF LOCAL REVENUE. OVER a 23 Year TIF, AN INTERGOVERNMENTAL AGREEMENT MAY NOT BE ABLE TO REPLACE THE LOSS OF LOCAL REVENUE CREATED BY THE TIF. A RESIDENTIAL TIF INCREASES SCHOOL EXPENDITURES WITH NO NEW REVENUE.

41 REVIEW A TIF CREATES REVENUE BY TAKING LOCAL PROPERTY GROWTH FROM TAXING BODIES. A SCHOOL RECEIVES STATE AIDE BASED ON LOCAL REVENUE. No New REVENUE IS CREATED THROUGH A TIF. THE New REVENUE IS CREATED THROUGH MAINTAINING GSA LEVELS THROUGH THE SCHOOL WHICH ARE PRO-RATED. Any Loss to the school district compounds on itself throughout the 23 year life of the TIF.

42 END