Mayor Emanuel is presenting his 2012 budget to the City Council tomorrow morning. Word on the street is that among a grab bag of fixes from fee hikes to grid-based garbage collection, he is planning on using 20 percent of unallocated tax increment financing (TIF) funds to infuse the City with an extra $15 million and give the schools a boost of $30 million.
Until today, Mayor Emanuel has been rejecting the idea of using TIF funds to balance the budget, claiming that he didn't want to follow in the footsteps of his predecessor by using short-term fixes. Back in August, according to the Chicago News Cooperative, the Mayor said, "The TIFs are one time. They don’t solve the problem. They don’t deal with the problem. Next year, we’d be back at it like Groundhog Day.”
In some ways, the Mayor is right. Certainly, we want to have long-term solutions to our long-term budget problems. Mayor Daley just last year plugged part of the school budget with TIF "surplus" money, and yet Chicago Public Schools still finds itself with a sizeable budget deficit today.
On the other hand, TIFs have created a property tax burden on residents by redirecting property taxes away from the City, schools and other taxing bodies. Because they aren't receiving enough revenue through property taxes, these taxing bodies end up increasing their property taxes to make up for the shortfall-- but that doesn't seem to be enough either.
Something is clearly awry if every part of local government from schools to parks to the City is hurting financially, but TIFs are bringing in-- what some estimate as-- a $500 million surplus.
To retain or return this money: that is the question.
There is no easy answer. But how can the public be confident that a percentage of our property tax dollars are better spent on TIF projects rather than helping to pay for our City and our schools and our parks, if we don’t know how successful the TIF projects are in bringing the promised jobs and economic revitalization? The answer, unfortunately, is that we can’t. We can’t because there is no public mechanism in place for holding developers accountable to the goals set forth for each TIF project. Therefore, the public is in the dark about how effective TIF districts and projects really are. (Read our report called “Shining a Light on Tax Increment Financing in Chicago” for more on this issue).
The City should give citizens the tools we need to evaluate the benefits and trade-offs of TIF. The City should account for the costs of TIF districts as a part of its overall budget-- enabling the public and decision-makers to evaluate the trade-offs involved in tax-increment financing and the impacts on other public services. This way, citizens and decision-makers can make a more informed decision about whether we should use or return unallocated TIF funds.
Mayor Emanuel will be presenting his budget to the City Council tomorrow morning at 10am. If you cannot make it down to City Hall, his budget address will be streaming live on the City Clerk's website.