Legislative briefing lays out scale and trade-offs of property tax exemptions and TIFs

Ted Barnett, Joint Fiscal Office, told the House Ways & Means Committee on Tuesday that property-tax exemptions and tax increment financing together account for most of the state’s property-tax expenditures and merit closer review.

The presentation focused on four large property-tax exemptions and on TIF districts. Barnett said the state’s property-tax exemptions are estimated to reduce state revenues by about $115,500,000 in fiscal 2026, up from $94,300,000 in fiscal 2023. He identified the largest single exemption categories as public pious and charitable exemptions and higher-education exemptions, and said those plus TIF districts account for nearly 89% of estimated property-tax exemptions in the tax-expenditure inventory.

Barnett said municipalities use TIF districts to fund infrastructure and spur private development and described the basic mechanics: a district’s base taxable value is set at creation, subsequent increases above that base are the “increment,” and a portion of that increment is used to cover TIF debt while the remainder flows to the education fund. Under current…