Is Northwest Side Ald. Tom Allen (38th Ward) emerging as the Chicago City Council's leading tax increment financing (TIF) watchdog? Since Mayor Daley began to detail just how bad the city's finances have become, Allen has been one of the most vocal critics of the mayor's decision not to crack open his $1 billion "piggy bank" to ease the financial crisis. The Sun-Times' Fran Spielman caught his latest remarks during a budget hearing yesterday:
It was opening day of City Council budget hearings, and Chicago aldermen were loaded for bear [...]
They railed about the mayor’s plan to spend all but $730 million of the combined, $3 billion in Chicago Skyway and parking meter proceeds while allowing tax-increment-financing (TIF) districts to siphon $540 million-a-year away from the city’s property tax base.
“We should re-name it the ‘Over-tax fund’ — OTF. How can we with a straight face tell the citizens of Chicago that, ‘We have $1.1 billion of your money stuffed under our mattress, but don’t worry. We’re gonna give you $35 million in [property tax] relief?’ ’’ said Ald. Tom Allen (38th).
City officials have tried to quash the suggestion; for instance, CBS 2 reported their response this week that TIF funds are off limits and can't be tapped for general operating expenses. Perhaps if more local reporters understood how TIF districts operate, they wouldn't be so quick to take the bait. The fact that many gloss over is that the TIF funds represented diverted operating dollars. As such, the growing loss -- $552 million last year alone -- is putting strain on the taxing bodies' finances.
As we've pointed out before, if the Daley administration would get creative with TIF and begin retiring districts that go unused or have met their objectives, millions in surpluses could be released back into the general fund. Yet Daley has gone to great lengths to distort the intent of the law (reversing blight), instead using the cash to help deep-pocketed companies with political connections land millions for their high-end developments. Departed Tribune business columnist David Greising recently described the practice "a racket."
Then there's the issue of leveraging the existing TIF funds to jumpstart the local economy. In the same report we criticized above, CBS 2 picked up on a worthy use of TIF funds today that we've been writing about for months: building affordable housing. Instead of investing in such projects, the mayor has long squandered "affordable housing" money on sweetheart deals that benefit the wealthy and politically connected at the expense of people who are facing a severe affordable housing crisis. Those choices are also placing additional strain on the city's operating budget as $1.4 million more is now being spent on homeless shelters that are overwhelmed by families who can't find an affordable place to live.
So to Ald. Allen's latest complaint, we say: more like this, please.
Comments
valeriefleonard on Thu, 10/29/2009 - 23:32
I was very disturbed to learn that the City intends to use all but about $730 million of its $3 billion rainy day fund on current expenses. This includes the proposed use of $1.4 million to be used for programs to assist the homeless. The City would also use proceeds from the sale of the parking meters to provide tax relief to homeowners. One alderman is quoted in one of the newspapers as characterizing the current budget proposal as mortgaging the City’s future. A more accurate description would be “fire sale”.
I agree that the City should do something to assist the homeless. I also agree that the City should do something to provide tax relief to homeowners. In fact, it’s a shame that the lowest income communities in the City have to bear the largest brunt of the City’s property tax increase—for at least the second consecutive year. However, I don't agree that using proceeds from the sale of parking meters and other revenue generating assets is the way to finance these programs. There should be fundamental changes made to the City's taxing, financing and budget structure.
Giving proceeds from the sale of parking meters to the homeless and homeowners is a one time "fix", and does not make the decision to sell the parking meters under duress any wiser than it was when it was originally made . It only serves to make taxpayers and the homeless accomplices after the fact, and gives the impression that the City is trying to provide political cover, or shall I say “recovery”, from the fallout of a very unpopular decision. In spite of the fact that citizens continue to express outrage over the parking meter debacle, there are reports that the City is still considering options to sell other revenue generating assets.
valeriefleonard on Thu, 10/29/2009 - 23:34
If I recall correctly, Chicago's general operating budget was in the $3 billion range in 1991. Adjusting for inflation, one would expect Chicago's budget to be in the $4.7 -$5 billion range today for the same level of services we had in 1991. The 2009 budget is $5.9 billion, and the proposed 2010 budget is $6.1 billion--not including expenditures from special funds like TIFs and the capital budget. On top of that, approximately 40% of the City's land mass is “TIF’d”. Recent budgets as well as the 2010 budget indicate plans to bring on 15-16 TIFs per year. At this rate, the entire city could be “TIF'd” by 2025, which would further strain the system.
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