Equity and entrepreneurialism - The impact of tax increment financing on school finance

How do the socially reproductive functions of local government fare within municipalities that adopt "entrepreneurial" economic development practices? This article examines the case of tax increment financing (TIF), a quintessentially entrepreneurial strategy whose use has significant fiscal implications for the overlapping taxing jurisdictions that provide these functions. Statistical analysis of TIF's impact on the finances of school districts in Cook County, Illinois, reveals that municipal use of TIF depletes the property tax revenues of schools during the lifespan of the TIF district but that a portion of the budget shortfalls are relieved by increases in state school aid. Entrepreneurial policies can create conflict between taxing bodies unless higher levels of government take on some of the fiscal burden of these more redistributive functions.