Earlier this month, Chicago Mayor Richard Daley released the latest round of alarming budget numbers, this time projecting a $300 million shortfall over the coming year. The deficit led City Hall to send out 1,500 pink slips to Chicago city workers, cuts which the Chicago Federation of Labor is still working to avert. In response to the news, Crain’s columnist Greg Hinz noted that the layoffs — if finalized — would only fill “about 10% of [the] hole in the city budget.” He went on to ask: “So, where’s the city going to get that kind of cash?”
Good question. During Ald. Manny Flores’ appearance on Fox Chicago Sunday two weekends ago, one possible source of additional revenue came up: Daley’s sprawling tax increment financing (TIF) system. (Want to get up to speed on TIF? Check out this 2007 Reader article.)
“How much TIF money does the mayor have at his disposal?” co-host Dane Placko asked Flores, who has emerged as one ot the City Council’s TIF reform champions. In response, the First Ward alderman emphasized the need for more transparency regarding the city’s finances. Watch it (the relevant discussion begins at the 3:20 mark):
It’s great to see reporters asking questions about the TIF system in the context of the budget negotiations. For years, the Reader’s Ben Joravsky was a lone voice in the local media calling attention to this mayoral slush fund. In the meantime, the property tax revenue being siphoned away from local taxing bodies through TIF has more than doubled over the past six years — from $216 million in 2002 to $570 million in 2008.
It seems ridiculous to be redirecting so much money away from the general tax base at the same time that revenues are sharply declining. Indeed, with a little creative thinking and flexibility on the part of city officials, there are several adjustments to the TIF system that could provide some relief for cash-starved taxing bodies in Chicago. In this post, we’ll examine three potential modifications: redistributing surplus funds, terminating "elderly" TIF districts, and adjusting the TIF tax base for inflation.
