Progress Illinois

In late August, State Rep. John Fritchey (D-Chicago) introduced a trifecta of bills (HB 6902, 6903, and 6904) that, if signed into law, would revolutionize how the City of Chicago's controversial tax increment financing (TIF) program operates. Fritchey, however, is running for Comm. Forrest Claypool's seat on the Cook County Board of Commissioners and is slated to leave the General Assembly. Will his bills die?

Not necessarily. Earlier this week, State Sen. Heather Steans (D-Chicago) told Progress Illinois that she is "very interested" in carrying the torch on some version of Fritchey's package. The precise wording of the legislation could change, but Steans said she would look at pushing a Auditor General investigation; examining the definition of blight in the current state TIF law; increasing transparency in "porting" TIF dollars; and excluding certain taxing bodies from the program going forward. "With the mayoral election coming up, the timing is good," Steans said.

What's less clear is how, legislatively, this may play out. It's unlikely the bills will get a hearing during the fall veto session, according to Steans. And state representatives may want to sponsors the bills, as well. "What I don't know is if someone is going to pick this up on the House side," Steans said. State. Rep Greg Harris (D-Chicago) did tell PI he's talked with Fritchey about the bills and Fritchey himself said he's canvassing his colleagues for support. A call to State. Rep. Barbara Flynn Currie (D-Chicago), a leader in the Democratic caucus, wasn't immediately returned.

In other TIF news, State Rep. David Miller (D-Lynwood), who is the Democratic nominee for State Comptroller, has proposed an online database to help the public understand how each of Illinois' 1,000 TIF districts are operating if he's elected in November. “There are millions of dollars at stake," he said in a press release, "and taxpayers deserve to know whether or not these TIFs are benefiting their community."

Over the last few months, State Rep. John Fritchey (D-Chicago) has emerged as the leading state legislator calling for a new approach to the City of Chicago's tax increment financing program. He has introduced legislation in the General Assembly that would send unused TIF dollars back to various government agencies at the end of each fiscal year, a move that would erode Chicago Mayor Richard M. Daley's control over the TIF districts and the money they contain. The Board of Education alone could get some $535 million if the proposal was passed out of Springfield and signed into law, Fritchey says.

A story published today by the Chicago News Cooperative says that the North Side representative is now mulling more than reform of Daley's TIF empire. Fritchey, the News Cooperative reports, has "added his name to the list of politicians who say they are considering challenging" the mayor in the Feb. 22, 2011 municipal primary election. Fritchey had this to say about the mayor's style:

People want intelligent debate on decent proposals. They are tired of being told, ‘This is what we are doing, here is the deal, take it or leave it.’ It’s healthy to offer competing alternatives and ideas. Not every proposed idea has to be seen as a challenge to his authority, but that has been the case.

But Fritchey, who is presently campaigning for a seat on the Cook County Board of Commissioners, says he's only considering the idea -- he'd only run for mayor "if I felt there was a broad core of support out there." Similarly, Ald. Scott Waguespack (32nd), who recently called Daley a "horrible manager" of taxpayer funds, is tacking toward a re-election bid to city council, as is Ald. Robert Fioretti (2nd), also much discussed in recent weeks as a mayoral candidate.

Chicago Mayor Richard Daley unleashed a barrage of insults against the financial acumen of unnamed state legislators at a press conference on the North Side yesterday. As noted by the Chicago News Cooperative's Dan Mihalopoulos, the mayor didn't specifically identify State Rep. John Fritchey, the Chicago Democrat who's now running for a seat on the Cook County Board of Commissioners. But Daley's remarks came two days after Fritchey announced that he'd introduce legislation in Springfield calling for non-appropriated funds stationed in the city's TIF districts to be returned to local taxing bodies at the end of each fiscal year. If passed, the bill would send roughly $535 million back to the Chicago Public Schools, which like many government bodies is struggling with deep budget deficits. But in what the News Cooperative characterized as "caustic" remarks, Daley told reporters this in discussing the TIF program and state legislators:

Everybody wants to raid something. I’m not going to listen to state government for financial advice. I’ll tell you one thing: The city of Chicago should not listen to the federal or state government for financial advice. We would be bankrupt today. We [should] not listen to them, your state senators or representatives. No way. Look what they’ve done with the state budget and now they’re telling us what to do with the city budget. No way.

While the top mayoral aides have not specifically ruled out declaring a TIF surplus and sending those dollars back to various city and county-based taxing bodies, Daley's comments yesterday are in line with his recent full-throated defense of how his administration uses and controls TIF dollars, including grants to profitable downtown corporations. With three public hearings about the Daley Administration's 2011 budget scheduled to start next month and a Fritchey aide recently telling Progress Illinois the representative will introduce the TIF surplus legislation within a few days, the issue appears to be coming to a head. But with the TIF program, Daley seems content with the status quo.

This post has been updated to correct how much would be sent back to CPS in TIF funds if Fritchey's bill was signed into law.

Last year, we closely covered efforts in the Chicago City Council to make the mayor's tax increment financing (TIF) system more transparent.  In his latest post on his Rockford Register-Star blog, Ted Biondo is taking up a similar cause in response to Rockford's off-budget TIF network:

TIFs advisory groups should be under the Open Meetings Act. TIFs should also be on-budget, so the citizens know how the successful TIF’s money is spent and where - on developments within the TIF or adjacent TIFs. Without tansparency, how do we know where any of this money is spent?

Good to see awareness of this issue spreading. If you're new to the TIF issue, be sure to read the first half of Biondo's post, in which he clearly lays out how TIF districts operate.  His earlier post on the history of TIF is also worthwhile.

Tax increment financing (TIF) has become a central component of the Chicago Public Schools budget debate this summer. Last week, WBEZ reported that the Chicago Teachers Union was pushing aldermen to support an ordinance that would allow some TIF money to be returned to the school district. Because there are several ways in which TIF money could be sent back to CPS headquarters, we asked CTU for a bit more clarification about the approach they prefer. Here's what they told us over the weekend:

The CTU's preferred approach to TIFs are returning the $1.2 billion TIF surplus as a short-term option that would give Chicago Public Schools and all public services a much-needed shot in the arm.  For a long-term fix, TIFs should only exist in truly blighted areas and the monies held and spent as a trust by local community members and officials.

On Tuesday at Lane Tech High School, CPS will hold its first of three public budget hearings. The meeting begins at 6 p.m.

In a written statement issued yesterday, Chicago's Chief Financial Officer Gene Saffold pooh-poohed the news that Fitch Ratings is downgrading Chicago's bond rating on billions in outstanding general obligation bonds. Saffold said the city didn't believe the decision "will have a significant impact on our long-term borrowing costs," mainly because officials at City Hall see the financial crisis as the main driver of Chicago's budget woes.

That's true enough. Like the state and municipalities nationwide, Chicago has seen its tax revenues dip sharply over the past two years. But the report underlies some fundamental problems with the city's budget practices. Fitch specifically criticized Mayor Daley's decision to use reserve funds (like those created by the parking meter and Skyway privatization schemes) to cover operating expenses over the last several years. Those operating deficits wouldn't be so high if the city hadn't siphoned off so much property tax revenue into its tax increment financing "shadow budget," either. Over 90 percent of Mayor Daley's own property tax bill, for example, is tossed into that fund instead of toward regular taxing bodies. In other words, there are reasons why Chicago's long-term outlook is "negative" while those of other cities remain stable.

For years, Chicago-based reporters not named Joravsky avoided writing about the Daley administration's tax increment financing (TIF) system, largely out of fear that the issue was too arcane for regular readers to understand. That's changed over the past two years, when some enterprising reporters ably described how the mayor spent taxpayer dollars to prop up thriving communities while worsening the city's recession-induced budget problems. Now, even major papers like the Tribune are penning editorials calling on the mayor to raid this year's TIF surplus and use the cash to plug budget gaps.

Community groups and academics are also trying to get voters up to speed about how the mayor's use of the development tool affects the taxes they pay and the services they receive. The University of Illinois-Chicago's School of Urban Planning has launched a new, user-friendly website that allows residents to research TIF districts in their neighborhood. And on Saturday, the Organization of the Northeast is holding a TIF training session at Uptown's Truman College. You can find more information about the event at ONE's website.