During Mayor Daley's budget address yesterday, we listened closely to see if he would make any mention of Chicago's other budget: the $1 billion in taxpayer dollars currently sitting in off-the-books tax increment financing (TIF) accounts. To no one's surprise, the mayor ...
During Mayor Daley's budget address yesterday, we listened closely to see if he would make any mention of Chicago's other budget: the $1 billion in taxpayer dollars currently sitting in off-the-books tax increment financing (TIF) accounts. To no one's surprise, the mayor glossed over how this mayoral "piggy bank" -- which last year siphoned off $552 million from local taxing bodies like the schools and parks -- factored into his long-term thinking about the city's finances. That's because the mayor already has his own quiet plans for handing out the public funds, according to documents (PDF) obtained by the Reader's Ben Joravsky and Mick Dumke. They explain the significance in their new, must-read cover story:
[T]he money's supposed to be used to subsidize economic development in depressed communities that would otherwise receive no investment. But according to aldermen, and as the TIF documents we obtained show, the program is used to help clout-heavy developers and corporations, pay for basic infrastructure and services without the public oversight given the official budget, and strengthen the political position of the mayor. [...]
By moving more necessary expenditures into the secret budget that he ultimately controls, the mayor also wields even more power over every public entity, from the City Council to the public schools to the Park District. At various times at least half a dozen aldermen have told us that mayoral aides pressure them on key votes—such as the ordinances for funding the Olympics or moving the Children's Museum to Grant Park—by either promising to give their wards more TIF dollars or threatening to take TIF dollars away.
Bingo. While we have no way of tracking which TIF projects successfully deliver an economic boost and which don't, we do know this: The TIF system allows Mayor Daley to curry favor with Chicago's corporate elite while keeping the City Council in lock-step with his agenda.
In recent months, we've repeatedly highlighted how tens of millions of dollars from the downtown TIF accounts are regularly used to subsidize the renovations of swanky new corporate offices in the Loop. It's infuriating to watch these giveaways (United Airlines secured $50 million from the city in just the past two years) at a time when Chicago faces a $520 million budget shortfall. During an appearance on WFLD's Good Day Chicago this morning, the Better Government Association's Andy Shaw used our favored term for this ongoing practice: "corporate welfare." "We are subsidizing wealthy developers and all kinds of people who are friends and cronies of the administration when our taxes are sky-high," he said, holding up a copy of Joravsky and Dumke's article. "And this is wrong because we need transparency here." Watch it:
SHAW: This is corporate welfare. We are subsidizing wealthy developers and all kinds of people who are friends and cronies of the administration when our taxes are sky-high. The point is this budget is not scrutinized by the public. It's not scrutinized by the City Council. You can's see it online. The mayor, people in his department, and some aldermen make $1 billion worth of spending decisions essentially in the dark. And this is wrong because we need transparency here. Maybe the projects are worthwhile but we need a vigorous debate when you spend $1 billion tax dollars -- and that means the rest of our tax dollars are higher -- you need a debate over whether those are good or bad projects and we're not having that.
Unfortunately, as the Reader article details, the Daley administration doesn't seem to be slowing down:
In May the City Council voted in favor of giving $3.8 million in TIF funding to Willis Holdings Group, the [Willis Tower's] chief tenant, and earlier this month it signed off on $35 million in subsidies to help United Airlines cover the cost of moving into the 110-story skyscraper.
But according to the internal budget, the city has "pending" plans to spend still more—$13 million in 2010 and another $15 million in 2011—for a line item called "Willis Tower Rehab & Modernization Project." [...]
Yet according to Second Ward alderman Robert Fioretti, Jack George, a lawyer for American Landmark, has been pushing for the city to spend up to $200 million in TIF dollars on the building. "George first came to me two summers ago, in 2008," says Fioretti. "I'm still fighting [him] over that—it's a lot of money for one building."
Some aldermen broke the code of silence on TIF earlier in the year, joining Alds. Manny Flores (1st Ward) and Scott Waguespack (32nd Ward) in passing the TIF Sunshine Ordinance. While the city still has a long way to go in meeting the new disclosure requirements, the fact that some officials are beginning to pressure the mayor to reconsider his TIF priorities is certainly encouraging. But in closing out just two TIF districts as part of the new budget -- thereby returning a mere$8 million back to the general fund this year -- it's clear that the mayor isn't going to part with his slush fund easily. On WTTW's Chicago Tonight yesterday, the Metropolitan Planning Council's Peter Skosey said that the mayor's latest action is a reminder that "we ought to be looking at the other 160 TIF districts that are there." Watch it (full video here):
"The TIF district money should be included somewhere in this budget," Ald. Fioretti added. We couldn't agree more and hope to hear other prominent voices join that chorus as the city budget process unfolds over the next few weeks.