PORTLAND — For almost 30 years, tax increment financing has been an effective way for Maine municipalities to partner with businesses to bring jobs and economic activity to an entire region, creating growth that supports families and small businesses throughout that region.

That there has been more than $2.8 billion in TIF activity since 1985 speaks to our success in attracting investment and jobs. What’s more, the alternative to TIF-supported investment is too often no investment.

Yet TIFs remain controversial, as we see from a recent two-part series on TIFs written by Naomi Schalit of the Maine Center for Public Interest Reporting (“Maine’s TIF law lets businesses avoid paying for local services, schools,” Feb. 20; “Maine tax ‘game’ allows towns to protect state aid at expense of neighbors,” Feb. 21). The articles contained a number of assertions that combined to paint a picture of a tax program that hurts municipalities and benefits only a few businesses.

From my perspective, which includes more than 20 years dealing with economic development policies, the articles painted a false picture. TIFs work, and here’s how:

Tax increment financing accomplishes several things that are otherwise impossible.

Start with the basics. Municipalities can only use property taxes to influence investment decisions – their economic development toolkit is significantly smaller than the array of programs available to state government. That makes TIFs critically important to any municipality trying to attract investment and jobs.


Second, TIFs are structured by municipal officials, and they contain the terms and conditions that the municipality wants. I assure everyone that there are many very astute municipal officials out there who know full well how to drive a hard bargain for a TIF.

For those who don’t like a particular TIF deal, talk to your municipal officials. You’ll be surprised how much they know about what it takes to land an investment, and what will happen if an investment is lost. To suggest that only a handful of people in Maine understand TIFs, as one source did in the articles, is both condescending and plain wrong.

Third, and most importantly, TIFs are a key tool for attracting business investment and the jobs that investments create. By taking a narrow perspective, the series managed to miss the most important thing about TIFs – they support the community by creating new economic activity and new public infrastructure. New jobs. New family income. New contracts for the small businesses already in the community.

None of these benefits was even mentioned in the articles, but in fact these are the bigger-picture benefits that have made TIFs so successful in Maine.

To understand the full benefits of a TIF-supported investment, look beyond a single municipality’s border. For instance, a new business investment that creates 100 jobs in Westbrook doesn’t benefit only Westbrook. Workers from all over the region will earn salaries, buy goods and services and pay taxes. That means more economic growth for a dozen municipalities and more.

The articles made much of how TIFs change the distribution of (shrinking) state education and revenue sharing funding, but said nothing about the way TIFs expand a region’s economy. Far from “beggar-thy-neighbor,” TIFs create regional income and sales tax growth where it might otherwise not exist at all. TIFs help expand sales and income taxes, the very dollars that fuel state aid to municipalities. Again, a narrow perspective robbed the articles of a fair assessment of TIF policy.


Government and business in America have a long history of partnerships in support of economic growth. Public investments in infrastructure, basic research and market development are only a few of the ways in which public dollars have supported private-sector investment and job growth.

TIFs are no different. Municipal governments negotiate the use of new property-tax dollars, generated by new investment, in whatever way best supports attracting that investment.

In too many cases, no TIF means no investment. No investment means no new jobs, and no new contracts for existing businesses. All that adds up to is no growth.

In 2014, global competition for business investment is intense. Maine is no exception. For years, TIFs have provided municipal governments in Maine with a tool they need to compete – and the numbers quoted in the articles show they’ve done a good job using TIFs to help attract investments to many of our communities.

Our entire state needs new investments to keep existing jobs in place, and to create new ones. I hope folks will keep that in mind as they consider the pros and cons of tax increment financing.

— Special to the Press Herald

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