Maximizing TIF Revenues in the FY26 Budget

The desirability of our natural resources, quality of our schools and essential services have resulted in a draw to our community. During this period of growth, the Town has been thoughtful with the establishment and expansion of Tax Incrementing Financing (TIF) Districts, which apply to designated growth areas as well as Oak Hill. The proposed Fiscal Year 2026 budget, which is currently being reviewed by the Town Council, incorporates the use of TIF revenues toward expenses.

The establishment of a TIF is intended to be financially beneficial for the Town as well as an asset to enhance the community’s economic development and quality of life for residents. TIFs allow the Town to “shelter” (or shield) new assessed value created in the district from Scarborough’s overall State valuation. State valuation impacts how much of a State education subsidy the municipality receives, how much a municipality pays in county taxes, and what portion a municipality receives as subsidy from State revenue sharing. Because the new value is sheltered, it allows the Town to receive higher State subsidies (General Purpose Aid to Education and Municipal Revenue Sharing), while also decreasing our proportional share of County tax. 

In addition to the value within TIF districts being sheltered, any tax revenues from within the district are designated for specific uses that enhance the community. Some community long-term benefits that can be met by TIF districts and TIF-funded projects include job creation, job retention, capital investment, tax base improvement, public facilities improvement, and locally controlled development. 

TIF revenues (property taxes paid on the sheltered value within our TIF districts) have been steadily increasing, and Fiscal Year 2026 marks a watershed moment where TIF revenues serve to reduce impact on all Scarborough taxpayers. The FY26 proposed budget allocates approximately $5 million in TIF revenues to offset operational expenses, pay existing debt service, and cover capital expenses that would either need to be bonded (financed) or appropriated.

Of the nearly $5 million of TIF revenues to be used in FY2026, approximately $3 million will be used to offset operating budget expenses including staff costs, traffic-related expenses, environmental infrastructure, trails and recreation initiatives, and public safety facilities and equipment. Nearly $1 million in TIF Revenues will be used to pay existing debt service to cover half of the Public Safety Building debt and Gorham Road improvements. The remaining $900k in TIF revenues will be used to pay for capital expenditures to include traffic, roadway, facilities and recreational projects that would otherwise need to be included in the operations budget, and impact the tax rate, or be bonded for future repayment. 

As growth in the TIF districts continues (and it is predicted to do so over the next 15 years or so), the TIF revenues that are created will serve as an important way to manage the tax rate. 

Learn more about the proposed FY2026 budget.