We’ve seen this movie
The Tax Incremental Finance (TIF) train in Wausau careened off the tracks on Monday and sits smoldering in a pile, its wheels spinning.
The train had been racing down the track. City of Wausau officials, hoping to use TIF to finance a Wausau Center Mall redevelopment project (new housing, retail, beer garden and a promenade to the Wisconsin River) successfully leaned on Sen. Jerry Petrowski (R-Marathon) to draft legislation to exempt the mall redevelopment project from a 12 percent cap on Tax Increment District (TID) property. The request followed a Department of Revenue report in August 2021 calculating Wausau’s nine active Tax Increment Districts at 13.6 percent of the city’s tax base, 1.6 percent over the legal cap. Petrowski got to work and, getting support from local assemblymen Reps. John Spiros (R-Marshfield) and Pat Snyder (RWausau), drafted a 12 percent cap exemption bill. The legislation, patterned after TIF exemption bills for Weston, Kronenwetter and Marathon City, passed the assembly last week Wednesday on a 96-0 vote.
But that’s when the train’s wheels went wobbly. The Wausau Pilot and Review reported Friday that a majority of the Wausau City Council, including its president, had no knowledge of the Petrowski bill. One alderman, Tom Kilian, told the online newspaper that he would have testified against the legislation but had no idea that Petrowski’s bill had a public hearing before the assembly’s Committee on State Affairs.
On Monday, Petrowski washed his hands of the whole mess, dooming the bill in the current session.
The TIF fiasco suggests some welcome progress. It indicates people, including alderpersons on the Wausau City Council, may be getting tired of handing out property tax subsidies to developers and businesses without robust public review.
We certainly are. In January, we learned from the Department of Revenue that $1.5 billion or 20 percent of the county’s tax base already sits in 37 Tax Increment Districts (TIDs) across the county. The statistic makes a mockery of the state’s 12 percent cap and tells us that county development strategies are way out of whack.
The Wausau to Madison train wreck asks us to remember why it is that the state’s TIF law has a 12 percent cap in the first place. The reason is to provide balanced growth. TIF is a powerful tool to stimulate development, but it robs local governments of tax base to pay for maintenance. If you create too much development through TIF, you don’t have enough tax base to pay for fixing aging infrastructure, including roads, bridges, storm sewers and utilities. You get strange growth: gleaming business buildings and streets dotted with potholes. When this happens, municipalities use TIF to create more development but, like a drug addict, never can get enough stimulus. Here, in Marathon County, municipalities turn to friendly legislators for a fix to feed their development addiction.
It will be interesting to watch how the City of Wausau deals with its TIF debacle. The city council might debate the question and decide to ask the legislators for an exemption. Otherwise, the city could elect to wait until two TIDs close out in 2024 and 2025, pursuing the mall project without an exemption. This might, of course, put the project in jeopardy.
Our request is that the Marathon County Human Resources, Finance and Property Committee needs to carefully follow this issue. It will take an affirmative vote of a Joint Review Board, where the county has a vote, to approve the city’s TID No. 13 for the mall redevelopment. The county should vote against any city project that violates the 12 percent cap, regardless of whether the state grants an exemption or not.
The Wausau Center Mall, opened in 1983, was financed in part by TIF to clean-up downtown “blight.” Shortly after the mall TIF was closed out, the city bulldozed most of the structure. Promised taxes from the project were never realized. A new generation of developers now want to use TIF to clean up the “blight” that used to be the mall.
We’ve seen this movie before. Endless development subsidies lead nowhere. Somebody has to stand up for taxpayers and common sense government.
