TAX INCREMENT FINANCING AND THE GREAT RECESSION

The Great Recession was accompanied by a large decline in real estate values. Tax increment financing (TIF) allocates future property tax growth to promote local real estate development and is thus particularly vulnerable to real estate market shocks. Data on the growth of TIF increments before, during, and after the recession is examined for Illinois and Nebraska. In both states there was rapid growth in TIF increments before the onset of the recession. There was a large decline post-onset that is very apparent in Illinois, but not as sharp or obvious in Nebraska.