TIF districts, abatements blamed for high taxes in Lake County

The Merrillville Town Councilman worries because TIF districts, which freeze property tax collections within specified geographic boundaries, force taxes upward for property owners elsewhere in town.

But he sees few other tools for Merrillville to lure economic development and its attendant jobs.

In 2006 alone, Merrillville saw more than $1.5 million in potential property tax revenue from its four TIF districts held off the rolls, according to Lake County records.

The money was used to pay off bonds for infrastructure improvements within the districts or to fund such projects outright at the sites: Century Plaza, along Merrillville Road, the Ameriplex at the Crossroads and along Mississippi Street.

Widing acknowledged Merrillville could well use another $1.5 million to hold down residents' taxes each year.

But taking the long view, he believes the businesses the districts lure to town will more than make up for it.

"Look, that's the only way we could get companies to come in to develop these areas," Widing said. "We wouldn't be generating any property taxes from these areas anyway, if we hadn't put those in place.

Still, Widing said, "I think we have as many as we can handle."

Finding a balance between a much-needed economic pump primer and an onerous burden on residents and small businesses outside the special economic zones was addressed recently by Lake County financial adviser Dante Rondelli.

With the state leaning ever harder on Lake County to adopt an income tax, the county council wants badly to convince state legislators wasteful government is not the reason for high taxes in the area.

Rondelli told the council TIFs and other tax abatements may be a bigger culprit than profligate public spending.

Countywide, there are 62 TIFs, including 23,035 properties, the vast majority of which pay no property taxes into the general property tax coffers.

Gary has 16. Hammond has 11. St. John has five.

Taken together, $23.6 million which otherwise would have been Lake County property tax revenue stayed inside the 62 districts in 2006.

The missing money is significant enough to noticeably raise tax rates outside the TIFs, Rondelli said. "By themselves, these districts are just pennies added onto the rates. But overall, it is quite a bit of money."

Rondelli worries municipal councils facing stiffer competition to lure companies sometimes don't consider whether the rising taxes will do more harm than the added jobs will do good.

But even those who take a dim view of TIFs say local elected officials have few other options to try to spur economic development.

Financial analyst and lobbyist Joe Gomeztagle called on the General Assembly to provide cities and towns other tools to try to help themselves.

"You want jobs, but the state doesn't provide any other avenues except TIFs and abatements," Gomeztagle said. "Everybody is frustrated because we're no longer growing and they want to do something about it."

Gomeztagle pointed to sales tax increment financing as a possible way to remedy the situation.

The program would allow municipalities to keep part of the sales tax collected at retailers that move into areas the municipalities have renovated ahead of time, through infrastructure improvements.

"That would keep the costs off the backs of property owners, and allow Lake County to diversify its economy more by bringing in some high end retailers," Gomeztagle said.