Utilities and Government and Economic Development and Media & Marketing

VIEWPOINT: State's STIF-necked response shortsighted

February 20, 2006

Chances are, most of you have never heard of the acronym "STIF." The four letters stand for sales tax increment financing. Indiana has created so-called STIF districts around the state to stimulate economic development, or so we thought.

STIF districts work simply: They allow a portion of sales taxes generated at new retail projects to be redirected to pay the cost of public improvements related to the projects, things like curbs and sidewalks, streets, sewers, other utilities, drainage and landscaping. STIFs can often make the difference between a project that is economically viable and one that isn't.

Too many people in Indiana operate under the mistaken assumption that STIFs represent a tax hike or an improper use of tax dollars. I disagree. STIFs allow projects that might never be built to move forward. And, ultimately, that means more sales taxes and more retail opportunities for people like you and me. Without STIF, there would be no project. No project, no additional taxes. Period.

While this seems blatantly obvious, our "economic development" governor and the Indiana Economic Development Corp. over which he presides apparently have a different view (before you cry "partisanship," I'm a Republican).

Last year, Gov. Mitch Daniels and the IEDC shot down a proposal to help Hammond by approving STIF bonds for a new Cabela's store in that city. Cabela's is one of the nation's leading outdoor-sportinggoods stores. This retailer would have provided a significant boon to economically challenged northwest Indiana; instead, the site may well sit empty and there will be no tax dollars generated at all. It baffles me that the same administration that so eagerly embraced the privatization of our state's only toll road would reflexively dismiss a proven economic development initiative.

If states want the economic benefits provided by folks like Cabela's, they need to step up. If Daniels can buy the logic of publicly underwriting a professional football team, it's beyond me why he can't be persuaded of the value of helping make the Hammond region a stronger community. The media have reported that Cabela's, Hammond and the state are now looking at other potential incentive options. But they already have a viable option that has been part of economic development policy for years.

You may wonder why I support what in fact amounts to a short-term tax break for developers. I have many reasons. First, competition among states for new, regional-destination retailers has never been fiercer. Second, these stores provide sorely needed jobs and, when the STIF bonds are paid off, these stores and projects will generate significant sales taxes. Finally, in some cases, a STIF designation can trigger an economic-development-producing property-tax revenue, income taxes and, when the bonds are paid, salestax revenue.

STIF was created for sound economic reasons. It is intended to help the state remain competitive and benefit its taxpayers. STIF will significantly increase our tax base over time. I'd like to know precisely how this is not an appropriate use of taxpayer dollars. Hoosiers deserve progressive leadership in this area, more than canned sound bites and ambiguous denials.

In the competitive 21st century, it is incontrovertible that major development needs public incentives. STIF is one of the soundest options available because the taxpayer sees no increase, yet reaps the dividends once the bonds are paid off. It's time for Indiana government to start thinking unconventionally and adopt this aggressive approach to creating jobs and retail projects that foster economic development and improve the quality of life in our state. It's time for politicians to stop treating STIF like a four-letter word.



Reno is founder and president of Avatar Communications Group, a local public relations and corporate marketing firm specializing in the field of economic development.
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