“As an economic developer, I wish the playing field were level across the board,” Wood said. “But it's not.”
Tax increment financing
Dan McMahan, an attorney who specializes in public finance and was formerly general counsel for the Oklahoma Commerce Department, recommended lawmakers study the impact of Tax Increment Financing on local revenues.
Tax Increment Financing, or TIF, allows the taxable value of any improvements made to property in a designated blighted district to be used to pay off bonds for other property improvements in the area. Bricktown is in a TIF district.
“Since the Legislature adopted the local development act in 1992, and especially after 2004, Tax Increment Districts have been indispensable,” McMahan said. “These districts have provided revenue for the most critical economic development projects in our state.”
Because every other state utilizes a form of TIF, McMahan said repealing or weakening the TIF would be detrimental.
However, he said the TIF program has resulted in the tax base, particularly for schools, being unnecessarily reduced in some cases.
McMahan said that every use of the financing tool goes through a “but for” test. “It essentially means that private investment would not have occurred if the improvements that are being financed with tax increment financing weren't made,” he said.
McMahan recommended a study of the use of TIF to determine when that “but for” test was not met, and how those projects have had an impact on the state aid formula that determines funding for schools.
“For those instances in which the but for test was not met, one could argue the state aid formula was being unnecessarily strained because of the use of tax increment financing in that case,” he said. “That's what our friends in the education community have rightly argued, I think, for several years.”