From Chicago Magazine:
"Some critics argue that the mayor's controversial use of tax increment financing districts, or TIFs, is a version of the budgetary sleight-of-hand practiced by his father. On paper, TIFs are supposed to freeze property taxes and earmark new revenues for economic development projects in blighted neighborhoods. The TIF, or something like it, is a common economic development tool in cities around the country. But as Ross Miller points out, "Chicago always does it bigger and better." According to the Cook County clerk's office, TIF revenues have grown from $10.6 million in 1989, when Daley II took office, to more than $500 million in 2006.
Urban affairs reporter Ben Joravsky, of the Reader, argues that Chicago's 160 TIF districts—particularly the nine or so TIFs in and around the Loop area—have become a "secret slush fund" for the mayor and aldermen to subsidize private developers (many of them friends or campaign donors to the politicians) in lucrative projects downtown. By Joravsky's count, TIFs suck away more than $500 million a year in property tax dollars that could be spent instead on parks, schools, libraries, and the city's ailing mass transit system.
Mayor Daley and many aldermen defend the use of TIFs as their only tool to spur economic development across the city. "Due to the continued decline in federal and state funding that cities are receiving for capital improvements," Daley says, "TIF has allowed Chicago to continue investing in much needed infrastructure, schools, transit facilities, public housing, streets, roads, and bridges."
The taxpayer watchdog Ralph Martire sees both sides of the argument: "TIFs can be a good tool," he says. "They can also be misused. Because this is Illinois, we get both."
"Mayor Daley and many aldermen defend the use of TIFs as their only tool to spur economic development across the city."
ReplyDeleteI am sorry, but government should not spur economic development. If anything in Chicago it hurts it. Ask the "Wild Pug" how government is helping spur business. Government should get the hell out of the way. This goes for both parties whether it be TiFs or tax rebate checks. This is such a con job and the engine of the Daley machine is starting to burn out.
People this is YOUR money. OURS.
Why doesn't Chicago have term limits?
Like I've said ...
ReplyDeleteTIFs can be valued at $500M.
The City has stated a $400M+ budget deficit.
Math, people.
Math.
The trouble with TIFs, is they are an economic fallacy. TIFs are nothing more than borrowing money from the future for expenditures today. Someday, that debt needs to be paid off, and its not hard to figure out how the city is going to get the money.
ReplyDeleteTIF = Raise your taxes later
A few points of clarification:
ReplyDeleteTIFs do not, as the post suggests, freeze property taxes. It segregates that portion above the EAV (equalized assessed valuation) and sets it aside for some specific, presumably pre-defined purpose.
TIFs, when improperly deployed, are much more likely to increase taxes and at a higher rate than might otherwise be needed. Why? Because the rate as applied to the EAV portion is effectively the same thing as having an altogether smaller tax base. More torque (higher %) is required to squeeze out more tax revenue.
TIFs have been used properly but instances are rare.