What treatment is appropriate for tax revenues related to tax-increment financing?

Tax-increment financing (TIF) is a public financing method used to subsidize redevelopment and infrastructure improvements through the future tax revenue that those improvements generate. The appropriate treatment of tax revenues from TIF aligns with recognizing them as general revenues because these revenues derive from property taxes that are collected and allocated for the specific purpose of revitalizing or improving certain areas.

General revenues are funds that can be used to finance any of the government’s functions and are not restricted to specific programs. Since TIF revenues are part of the overall property tax revenues collected by a government institution and can be utilized for various public services beyond just the scope of a particular project, categorizing them as general revenues reflects their versatile application for broader governmental purposes.

Program revenues, on the other hand, typically arise from specific activities or services provided to the public and are restricted to use for those program-specific expenditures. Operating grants and contributions focus on funding ongoing operational costs, while capital grants and contributions are related to funding for capital projects. Since TIF revenues are derived from property tax increments intended for a variety of public uses, general revenues is the most appropriate classification.