As Mayor Daley unveiled his latest budget today, the big news
surrounded his proposal to pull $370 million from the reserve fund
created by Chicago's parking meter lease to help balance next year's
$6.14 billion budget. But as we listened to him address the City
As Mayor Daley unveiled his latest budget today, the big news surrounded his proposal to pull $370 million from the reserve fund created by Chicago's parking meter lease to help balance next year's $6.14 billion budget. But as we listened to him address the City Council this morning, we wondered if he'd make mention of the city's other major reserve, the $1.4 billion that's squirreled away in off-the-books tax increment financing (TIF) accounts. After all, wouldn't this be the perfect opportunity for the mayor to make the case to skeptics -- Tribune columnists David Greising this week called the corporate TIF giveaways "a racket" -- that his economic development strategy is actually paying off?
Not surprisingly, Daley didn't deliver.
While he disclosed that $8 million in TIF funds will flow back into the general fund after two districts are retired, the mayor didn't make a single mention of how he plans to leverage the TIF system at large. Listening to his speech, you'd never know that the TIF network is the single largest tool that the city has at its disposal to balance the budget and jumpstart the local economy.
So why the silence?
Well, there's plenty of evidence to suggest that the TIF system is straining the city's operating budget despite being designed as an economic development engine. The mayor may also avoid the subject because he doesn't want aldermen to get any ideas about tapping his pet fund on their own. As the Reader's Ben Joravsky and Mick Dumke report in their latest must-read TIF investigation, the mayor has already devised secret plans to spend much of the money hidden away in his shadow budget. But that didn't stop Ald. Tom Allen (38th Ward) from telling the Tribune today that the mayor needs to stop handing over the money to deep-pocketed corporations and instead invest the money in the public sector:
"I'm saying we're handing out too much of the (tax-increment financing) money to private developers," Allen said. "It's public tax dollars, so I think citizens should be able to have access to it to help the public."
If Mayor Daley was pushed to get creative with TIF, he and the City Council could balance the budget, put people to work, and stabilize neighborhoods across the city. The mainstream media rarely adds any TIF analysis to their budget reporting, however, instead giving the mayor a pass for holding the line on taxes. That habit does not serve the public well.
On an encouraging note, some aldermen are finally beginning to acknowledge that the TIF money is indeed there for purposes other than corporate welfare. It will be up to them to continue pushing the issue. According to Center for Tax and Budget Accountability's Ralph Martire, who spoke on WIND's John and Cisco in the Morning today, the time for fresh ideas is now because it's only a matter of time before the mayor's strategy will implode:
JOHN: If at some point the mayor doesn't change course or cut the budget or figure something else out, we're going to run out of that reserve and he's going to be forced to raise taxes again.
MARTIRE: At some point? That point is coming closer. We had $3 billion in those reserves from those two big deals -- the tollway and the very controversial parking meter deal -- and now there is only $860 million or so left. That's less than one-third. We've already burned through most.
JOHN: What are we going to sell next? What's left to sell?
MARTIRE: There's not a lot left to sell. When the public sells of assets that are revenue generating, they don't get the higher end of the deal. Think about it. Private sector guys that are in business to make profit, they're pretty sophisticated at how to structure a deal to make a profit. And if they're making a profit, that probably means that the public sector is not. And those are very long-term deals; 75 years or so, etc. So, for a very long time, we're not going to get revenue off of the parking meters or the tollways and the problem is we've already burnt through two-thirds of the reserves. Of the money, that was supposed to go to long-term assets.
Image used under a Creative Commons license by Flickr user marcmonaghan.