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Table 5. Simulation Results for Different Tax Increment District (TID) Certification limits that lnay have a sm.all chance of finan- cial reward. Third, even if a TIF project produces net financial gains in the long run, in the near term TIF will likely cause nega- tive financial effects. Although projects with positive expected net present values should be implenlented, a policy of widespread use of TIF may be unsus- tainable from a financial standpoint. The ultiInate question for elected local officials is whether 'TIF proj ects expected to have long-term positive financial effects can be impleInented in the face of other short-term budget dem.ands. Those seeking to justify the use of TIF on the basis of nonfinancial rewards should be prepared to address how these rewards might offset the financial losses froIn the use of the particular incentive. Finally, we can now say a bit more about those circumstances that will lead to a profitable project from the local government's perspective. These circum- stances include low probability of devel- oplnent without TIF and a short certification period. As this study demonstrates, local governments face significant financial risks when they inlplement TIF projects, but that they can potentially reap finan- cial rewards. Currently TIF is an open policy option for conlmunity and economic developnlent in most states, and it will likely remain so for many years to come. However, much further research is necessary to provide context on the decision to use TIF. Epilogue: Is There a Future for TIF in Minnesota? During the 2001 legislative session (after the bulk of the research for this article was complete), the Minnesota State Legislature proposed and the governor signed a bill changing the way that primary education is funded in the state. The principal effect of the bill was to "remove" the basic general education levy from the local government property tax. An unintended consequence of this change was to relllove one significant financial participant from tax increment distlicts (before the changes, school district levies constituted an average 340/0 of the local property tax levy). Many observers have speculated that this change has struck the death knell for TIF in Minnesota. Previously, cities and counties wanting to use TIF shared the burden of financing TIF with school districts, each providing about one-third of the financial value. Now with the majority of school district finances conling from sources other than the local property tax, cities and counties will have to participate with nearly all of the necessary revenues for the project. Other economic development tools-such as the property tax abatement incentive authorized by the Minnesota legislature in 1997 (Minnesota Statutes 2001, ~469.1813) -may be more attractive for local governments. Education finance reform may well have struck a blow to the use of TIF in Minnesota, but there are at least a couple of ways that local governments can still employ TIE First, a local government could simply enlarge the district that uses the financing tool. A district with a larger geographic area would allow a jurisdiction to capture more resources to use for the project. Second, although property taxes are currently the only authorized source of tax increment funding in Minnesota, it is neither inconceivable nor unprece- dented for local governments to use other tax increments to finance econom.ic redevelopment.4 For the moment, TIF in Minnesota lllay not be dead, but only in hiatus. Kenneth A. Kriz is assistant professor of public finance at the School of Public Administration, University of Nebraska at Omaha. He was assistant professor of public and nonprofit management at the Hubert H. Humphrey Institute of Public Affairs at the time the research for this article was undertaken. His current research focuses on municipal debt management, economic development policy, and transportation finance, along with the use of alternative estimation techniques in public finance. He teaches courses in public sector economics, public finance, and statistical analysis. The research upon which this article is based was supported in part through a New Initiative grant from CURA. These grants support projects that are initiated by faculty, community organizations, government agencies, or students and that are not appropriate for consideration under another CURA program. For full results of this research project, see Kenneth A. Kriz, "The Effect of Tax Incre- ment Finance on local Government Finan- cial Condition." Municipal Finance Journal 22 (2001): 41-64. 4 For a review of other tax increment prograrns, see John L.Mikesell, uNonproperty Tax Increlnent Progranls for Econonlic Developrnent: A Review of the Alternative Programs." In Tax Increment Financing and Economic Development: Uses, Stnlctures, and l1npact. Craig L. Johnson and Joyce Y. Man, eds. Albany, NY: SUNY Press, 2001. SUMMER 2003 7