On April 17, the day of Chicago’s aldermanic runoff election, residents of Oak Park will get an opportunity city voters can only dream about: the chance to take a stand against tax increment financing districts.
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When the City Council or a village board creates a TIF district, it actually freezes the amount of money in property taxes that other taxing bodies–the schools, parks, libraries, and county, etc–can raise for up to 23 years. As taxes rise due to increased assessments and new development, all the new money goes to the TIF, to be spent at the discretion of the mayor or town leaders. In order to compensate for the money lost to TIFs the other taxing bodies have to raise their tax rates. In effect TIFs are tax hikes unlisted on any tax bill or budget.
TIF backers say the idea is to borrow tax dollars from the schools and parks and use the revenue to seed economic development that will produce more taxes when the TIF expires. In Chicago TIFs take upwards of $200 million a year in property taxes from the schools. Over in Oak Park the diversion has been offset somewhat because school board officials, who are elected rather than appointed, have fought back. Last year Oak Park’s elementary and high school boards forced village officials to return roughly $450,000 in TIF proceeds to the schools.
According to Johnson, the big apartment complex going up at Harlem and Ontario will go back onto the tax rolls in 2010, a year after it’s finished, so the schools and parks will start receiving their full share of its property tax dollars well before the TIF’s term expires. Chicago has never restored TIF property back to the tax rolls ahead of time.
