This week, Chicago Public Schools (CPS) officials announced an historic $475 million deficit and broke the news to property owners that a tax hike is on the way.  In responding to the news, at least one City Council member, Ald. Tom Allen, lamented the drain on local taxing bodies caused by Mayor Daley's tax increment financing (TIF) system.  Here's his quote from yesterday's Sun-Times article:

“People are despondent. They’re frustrated. They’re sitting on the sidelines waiting for this elusive recovery to appear on the horizon,” Northwest Side Ald. Tom Allen (38th) said Tuesday.

“It’s a little less … politically radioactive when you’re talking about educating our kids. ... It’s not like handing out money to developers. But, part of it goes back to all the money we have tied up in [tax-increment- financing]. If that money wasn’t siphoned off to all the TIF districts, it would be available to education.”

Well, that's refreshing to hear.

Allen's quote also begs the question: Exactly how much did the city's TIF districts "siphon off" last year?

On behalf of SEIU's Illinois Council (which sponsors this website), Robert Ginsburg, Ph.D. and Don Wiener, Ph.D. tallied up the 2008 annual reports for each district and found that the TIF system absorbed $552 million in property tax revenue in 2008 (about the same amount as in 2007). Considering that 50 cents of every property tax dollar goes to schools, it's safe to say that about $278 million of that revenue would have otherwise ended up in CPS' coffers.

The SEIU analysis also confirms that the TIF network continues to take in more than it can spend, and is building a hefty surplus as a result.   Indeed, at the end of 2008, the city's TIF funds had a collective $1.3 billion reserved for "future redevelopment costs."  The surplus remains that large even after the city retired the Central Loop district (a.k.a. the "granddaddy" of all TIFs) and went on a spending spree with the remaining balance.

So why isn't CPS chief Ron Huberman complaining about Daley's overgrown TIF system? Because, like his counterparts on the parks, library and transit boards, city officials who serve at the whim of the mayor  have "come to recognize that central government is ... not going to release those [operating] dollars," as TIF-reform activist John Paul Jones noted during a WBEZ interview yesterday. Instead, Jones added, "they've become comfortable with just receiving capital dollars on the TIF side."  (According to Ginsburg and Wiener's analysis, CPS received a $107 million infusion of TIF-backed "public improvements" last year -- still far short of the hole that the special taxing districts have created.)

But is the TIF surplus really off-limits to operating expenses?  In fact, the answer is no.  With a little creativity and courage on the part of Chicago aldermen -- as well as state legislators -- some of that money could be freed up and the ongoing drag on local taxing bodies could be lessened.  Read our recent feature article to learn how.