This commentary is by Michael Long, a resident of Burlington.
Burlington’s mayor and his department heads and councilors have had great success selling TIF (tax increment financing) to voters over and over. Free money, after all, is an easy sell.
But once the millions are in hand, the city has failed to track spending or allocate dollars responsibly.
The appeal of TIF — as the city less than honestly portrays it — has always been that these borrowed millions magically have no impact on taxes, but the Vermont state auditor finds instead in a report issued Jan. 20 that the general fund must shell out $1.2 million to the Waterfront TIF to make up for unauthorized expenditures.
It concludes that the city’s errors in the management of the Waterfront TIF District “were so numerous and of so many different types” that a “new process” is required. To paraphrase: The city’s TIF management is a mess.
There should be consequences for mismanaging borrowed millions, especially considering that 5 to 10 percent of those dollars are separately earmarked to pay for TIF management. Furthermore, the state audit notes that “all legal requirements were not followed when voters approved TIF debt.”
TIF is a “creative” financing method originally intended for exceptional circumstances, such as the restoration of blighted areas that would not otherwise attract private investment. It diverts tax revenue from the statewide education fund to secure and make payments on debt to finance eligible projects.
But over time, TIF has evolved or been distorted to provide corporate welfare in support of projects in areas not blighted at all.
The careless administration of TIF in Burlington is consistent with the corruption of TIF’s original intent. The auditor’s report does not flag just a few accounting errors; it enumerates “49 separate mistakes ranging from $457 to $250,000,” concluding that the city’s TIF program is “plagued by millions of dollars in financial mistakes.”
In fact, “the audit found that Burlington paid $1 million more for project costs than voters had authorized,” that it spent $178,098 “without the approval of the city council,” that it spent “$173,056 on projects not eligible for TIF funding, and that it “shortchanged (the statewide education) fund by $197,510.”
The mayor admits to “major errors,” and promises corrections, but instead of owning up that the buck stops in the mayor’s office, the four-term mayor faults the previous administration for its financial disarray and trumpets the city’s improved credit rating.
The auditor’s report, in contrast, attributes the many deficiencies to “poor record keeping, key staff turnover, and slow adoption of strategies recommended by the City’s own auditors.”
“Slow adoption” here is a euphemism for the pervasive disregard of sound accounting practices: Year after year, “the City’s financial statement audit firm flagged incomplete capital project accounting as a weakness and repeatedly recommended that the City establish a comprehensive framework for tracking project costs and debt.”
Rather than act promptly on such a recommendation, the city stood by while the same recommendation was made the following year and the next and the next.
TIF as we have it is a wasteful scam. There are better, honest ways to fund worthy municipal projects without false promises or double-talk. As Vermont’s auditor states bluntly, TIF “isn’t a cheap way to pay for infrastructure.” His office estimates that “Burlington will pay more than $11 million in interest for $32.6 million borrowed to pay for improvements” — certainly not cheap.
The problem is, there is no accountability built in. No heads will roll and no fines will be assessed. If a citizen is a day late paying property taxes, the penalty is automatic and unavoidable. But the city, without consequence, can fritter with millions to provide handouts to developers at the expense of our schools and the rest of us.
The state auditor has exposed the ineptitude, but it won’t be surprising if down the road or on yet another “great street,” the city will be hawking a new TIF marvel and maybe selling the Brooklyn Bridge too.
It’s time to have accountability for a change. Accountability would be fiscally prudent; accountability would save tax dollars — not to mention that democracy dies without it.