The most notable bill regarding economic development in the 2026 legislative session was HB 2451, which makes changes to the local property tax-based tax increment financing (TIF) tool. This bill was the result of monthslong stakeholder meetings involving representatives from cities, ports, counties, fire districts, library districts, and hospital districts, as well as representatives from the Department of Revenue and the Office of the State Treasurer.

AWC convened this stakeholder group to work through concerns raised by local taxing districts about the impacts TIF areas may have on their property tax revenues. The result was a complicated bill that increased the requirements for dialog between taxing districts, required mitigation negotiations, and enhanced the “but-for” determination. It also increased transparency with earlier notice and a new requirement for annual reports and excluded future levy lid lifts and EMS levies from TIF increment calculations. These changes will apply to TIF areas that take effect after June 2, 2026. The goal was to not impact TIF areas that are in effect as of June 1, 2026, to ensure that the changes only applied to TIF areas formed after the bill’s effective date.

TIF has proven to be an attractive tool to help spur development where it wouldn’t have occurred but for the investments made possible by TIF. However, the rapid growth in use of the tool combined with the complexities of the state’s property tax system led to a great deal of confusion and concerns about the impacts. AWC appreciates the work of all of the stakeholders who came together to find ways to make changes that still preserve the value of TIF for economic development in our communities.