Chris Lentino, specialist on Chicago issues, says, “The city is crying poor, but is sitting on over $1 billion in TIF money that could be used to cover pension costs, keep schools open.”
Chicago Public Schools, or CPS, officials are threatening to end the school year 20 days early unless the state agrees to cover the district’s massive budget shortfall. But an expert on Chicago issues at the Illinois Policy Institute says the city has more than enough money to fill the budget gap on its own.
On Friday, a Cook County Circuit Court judge is expected to announce whether a lawsuit alleging discriminatory funding by the state can move forward. CPS officials say that if the case cannot proceed, schools will close early.
But a closer look at the city’s finances proves it’s not necessary for the state to bail out the city’s school system, or for the school year to end early. Chris Lentino specializes in Chicago issues at the Illinois Policy Institute, and he recommends the city use its tax increment financing, or TIF, funds to close the budget gap, and then eliminate TIFs altogether.
“Parents and families in Chicago are waiting to find out whether students will be able to finish the school year, since the city is crying poor and says its hands are tied. But in reality, city leaders have more than $1 billion in accounts that they use to reward political donors and the well-connected instead of schools,” said Lentino. “The TIFs are essentially political slush funds that breed corruption. The city should return the TIF money to where it belongs to ensure students can finish out this school year. Then Chicago should end the practice of TIF districts entirely.”
According to a recent report from the Cook County clerk, approximately $461 million was generated by all TIFs in 2015 alone. Lentino suggests CPS use these funds and existing funds earmarked for “future redevelopment” to close the district’s $215 million budget gap, keep schools open through the end of the school year, and bypass the need for state assistance or another property tax increase.
- A “TIF district” is a tax increment financing district.
- In TIFs, the existing property tax rate for a designated area is frozen after officials have determined it to be “blighted.” The thinking is that freezing the property tax rate will give property owners an incentive to develop property in an undesirable area.
- However, this is not how the TIFs have been used.
- Instead, TIFs have become political slush funds into which Mayor Rahm Emanuel and other public officials can divert millions of tax dollars to reward their political donors.
- The Illinois Policy Institute suggests that TIF money be used to ease CPS’ urgent funding problems, and then be followed up by: 1) the elimination of TIFs, and 2) major reform to the city’s and CPS’ pension systems.
- In eliminating TIFs, concerns about corruption must also be addressed. The mayor and the Chicago City Council should evaluate all current TIFs and their earmarked projects. Only essential projects should be allowed to proceed before TIFs are eliminated, and all others should be canceled and the funds diverted to CPS.
For an explanation of TIFs and how they work, click here: https://www.illinoispolicy.org/tax-increment-financing-a-primer/
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