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Milwaukee Streetcar Will Benefit Developers At Taxpayers’ Expense

Through budgetary sleight of hand, Milwaukee taxpayers will spend millions on a controversial streetcar project that is not even expected to generate any new business growth.

Rick Esenberg, founder of the Wisconsin Institute for Law and Liberty,  argued in the Milwaukee Journal-Sentinel on Tuesday that, “the streetcar project involves massive diversion of tax revenue that otherwise could be used to relieve the burden on city taxpayers or meet other municipal needs.”

Funding for the streetcar comes from a tool called tax increment financing (TIF), through which municipalities use a portion of the property tax revenue in a specified district to build infrastructure for, or even give money directly to, a developer to facilitate a specified project.

Normally, Esenberg says, “the diversion of funds is justified on the grounds that the development—and resulting revenue—will not happen unless the city makes what is, essentially, a gift to the developer.” (RELATED: Chicago Taxpayers Could Finance Private University’s Sports Arena)

In the best-case scenario, TIF is little more than “crony capitalism on the hoof,” but in Milwaukee’s case the developments being taxed were already underway before the streetcar was approved. One of the TIF districts, in fact, “already has paid for the municipal improvements that it was created to fund.”

Rather than helping to fund true community services like police or schools, Esenberg points out, an estimated $31 million in tax revenue will be spent on “a transit technology that was the latest and greatest thing—in 1906.” (RELATED: A Streetcar Named Desire Taxpayer Dollars)

However, in an earlier op-ed for the Journal-Sentinel, Marina Dimitrijevic, chair of the Milwaukee County Board, contends that, “Developing the county’s underutilized, downtown transit center site is a critical step forward” in the city’s long-term growth, and that the streetcar will “provide training and economic growth.”

As evidence, she notes that many other cities are currently undertaking streetcar projects, and cites a 2008 report on the Portland, Oregon streetcar, which she claims found that, “more than $3 billion in new development has taken place within two blocks of fixed streetcar routes.”

Moreover, “The new sales tax our community supported has helped fund our cultural assets,” such as museums and farmers’ markets, by improving cross-town public transportation. (RELATED: Politicians Eager to Subsidize Craft Brewers)

Esenberg acknowledges that such justifications “will be considered groovy by the well-heeled millennials and empty-nested Baby Boomers that live downtown,” but points out that Milwaukee once had an extensive streetcar system that “became obsolete in the late 1940’s,” due to the rise of automobile traffic.

The best way to set funding priorities, Esenberg says, would be to “let the people vote on [the streetcar],” and decide whether it is more important to them than schools, police, and roads.

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