The Antiplanner is no fan of tax-increment financing (TIF), which was supposed to rehabilitate blighted neighborhoods but more often is used for crony capitalism and social engineering. The Colorado legislature was considering a bill to expand the use of TIF to allow cities and counties to use incremental sales tax revenues to pay for transportation projects to “underserved areas.”
An article on Monday argued against such an expansion, saying that it was likely to be abused to support projects that probably would not truly generate new economic growth (and thus no new taxes to pay for the projects). Fortunately, the bill died in the state house of representatives yesterday.
The article didn’t say so, but transportation projects should be paid for out of user fees, not out of imaginary economic growth. The transit industry makes a big deal of the “rate of return” on transit spending, when in fact that rate is negative. Transit advocates say that transit increases property values, but what they don’t say is, when this is true at all, it is a zero-sum game: any increase is balanced by a decrease (or slower rate of increase) elsewhere in the urban area.