Lawmakers, analysts review TIF rules, financing types and potential impacts on education fund

Lawmakers and fiscal staff on the Ways & Means committee spent a session examining tax increment financing (TIF) program clarifications, outstanding ambiguities in statute and rule, and how TIF districts have affected municipal grand lists and education fund receipts.

The discussion matters because TIF changes affect which local tax revenues are retained for municipal projects and which flows to the state education fund; committee members said they expect formal legislation next week and want rulemaking language and intent to reduce downstream ambiguity.

For the record, Ted Barnett, Joint Fiscal Office, briefed the committee on areas clarified by recent laws and on points still open to interpretation. "I'm not a lawyer. I don't want anything to be construed that JFO is interpreting statute or rule," Barnett said, and focused his remarks on where legislation and rule changes have already created specific clarifications.

Barnett summarized a set of financing issues addressed by prior actions: Act 80 of 2013 clarified that interfund loans may be used in a TIF but municipalities may not charge interest on those loans; Act 72 of 2023 added a statutory definition of "improvements" that permits municipalities to fund interest-only debt service payments for up to two years; and the 2015 TIF rule provides administrative detail on district administration and parcel accounting. He also…