Pennsylvania's Tax Increment Financing (TIF) Act has served as an important economic development tool for decades, helping local governments facilitate investment in projects that generate jobs and revitalize communities. As project costs have increased and financing markets have evolved, however, Pennsylvania's TIF program has become less competitive than programs in neighboring states.

To address this challenge, we will soon introduce legislation to modernize Pennsylvania's TIF framework by authorizing the use of tax agreements.

Under current law, TIF benefits are often delayed. This delay often limits the usefulness and utilization of TIF financing, particularly for projects requiring significant investments. As a result, otherwise viable projects may be delayed, downsized, or lost to competing states offering better financing structures.

This legislation would permit voluntary tax agreements between applicants and municipalities or redevelopment authorities, if both parties agree. This tax agreement would function similar to the current TIF structure but also ensures local municipalities aren’t on the hook for unexpected revenue shortfalls. By utilizing a tax lien structure, tax agreements ensure developers foot the bill, not taxpayers or investors looking to revitalize local economies.

Importantly, this legislation preserves local control by requiring approval of participating taxing bodies and utilizes only the incremental tax revenues generated by new development. This modernization will provide communities with an additional, voluntary financing option to support transformational investments, while ensuring that the Commonwealth and local taxpayers bear no financial risk.

Please join us in cosponsoring this important economic development legislation.