There are many reasons for the City Council to turn against Mayor Daley’s tax increment financing program.
As faithful readers should know by now, TIF is an off-the-books property tax hike passed by the City Council at Mayor Daley’s urging. When the aldermen create a TIF district, they freeze the amount of property tax dollars the schools, parks, county, and other taxing bodies can collect from that area for up to 24 years. To compensate for the revenues they’re not collecting from these districts, the schools et al have to raise rates on everybody else. In the last three tax years the TIFs have collected about $1.5 billion in taxpayer money. So the schools and parks and county do the dirty work of raising tax rates, and the extra cash gets turned over to Mayor Daley, who then can claim—as he did again just last week in a speech to business leaders at the City Club of Chicago—that he’s holding the line on property taxes.
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“We believed this was money that was going to be spent in our communities,” says Third Ward alderman Pat Dowell, who led the recent rebellion.
For the sake of transparent bookkeeping, it would make sense to fund each school construction project with money from the TIF district in which it’s located. However, some of these districts aren’t collecting enough property tax dollars to pay off the bonds the city has issued to build or rebuild schools. So Daley’s set up a convoluted rob-Peter-to-pay-Paul financing scheme—but with property values falling, it’s not certain that any of these accounts has enough money to pay for all this construction. So on top of everything else, the golden goose may be overextended.
In April Dowell decided to use a little aldermanic leverage. Knowing Daley needed the council to approve the second phase of Modern School funding, she sent a letter to Huberman informing him of her ward’s school construction needs. “I wanted them to understand my concerns,” she says.
As I’ve been telling school officials for years, they’d be better off without the TIFs. They could finance their own construction with taxes they raise directly and maybe have enough money left over to avoid cutting teachers or sports programs.
“Pat did a lot of lobbying,” says Fioretti. “My no vote was against the way schools are funded. We need to look overall at tall the issue of funding of schools throughout the city of Chicago.”
