Milwaukee and other government agencies would feel the heat from the city’s latest attempt to burn through its backlog of street projects.
The city has 214 miles of road that need repairs (PDF) and a budget strained to the breaking point. So Milwaukee Alderman Jim Bohl wants to use tax-incremental financing money to pay for road projects.
“I’ve just been looking for a creative way to fill that gap,” he said, “and there is no perfect solution. Unfortunately, money doesn’t grow on trees.”
Bohl’s plan (PDF) requires TIF districts that would close in 2011 and 2012 stay open to pay for street projects within a half-mile of their borders. That means the city and four other government agencies must approve the plan because they all would wait longer to collect taxes from the district’s increased property values.
A TIF district lets cities borrow money to pay for projects and use additional taxes generated by the projects, called the increment, to pay the debt. But other government agencies — school and sewerage districts, counties and technical colleges — will not receive their share of the increment property taxes from the new projects until the city debt is paid.
“As counties, we are aware of the implications,” said John Reinemann, legislative director of the Wisconsin Counties Association. “We are concerned about protecting our revenue streams. On the other hand, we also see a value in promoting economic development, and so, we’re a little ambivalent about TIF. It is a double-edged sword.”
Bohl is telling city departments to tally the number of street projects planned near nine TIF Milwaukee districts that are to close in 2011 and 2012. The nine districts could be extended to pay for streets. They generated $39.14 million in incremental taxes in 2008.
Bohl said it is not enough to pay for roads with the traditional method of borrowing money and the new tax on car registrations the city passed last year. Milwaukee Mayor Tom Barrett’s budget proposes spending $12 million to fix local streets (PDF), a $1.7 million increase over 2009.
Bohl’s plan also would let the city continue collecting taxes that otherwise would go to other government agencies starting in 2011 and 2012.
On the other hand, the other government agencies will be collecting more taxes in the end if the street projects improve property values, said Mike Daun, Milwaukee deputy comptroller.
“The (tax incremental district), I think, is a creative way to look at it,” Daun said, “but it’s ultimately a policy decision of whether the other government entities are willing to do that to close up that hole.”
In Milwaukee, the TIF plan would require approval from Milwaukee County, Milwaukee Public Schools, the Milwaukee Area Technical College and Milwaukee Metropolitan Sewerage District.
Fran McLaughlin, director of communications for County Executive Scott Walker, said Walker will keep an open mind.
“He would like to see what it has to offer,” she said, “and see what it means to the county.”