While Chicago Public Schools calls for state bailout, Chicago TIF districts bring in record $561M in revenue in 2016
Slush fund hits record amounts as Chicago looks to the state for a bailout.
Tax increment financing, or TIF, districts in Chicago generated a record $561 million in 2016, up nearly 22 percent from 2015, according to the Cook County clerk. As long as Chicago’s TIF program continues, Chicago Public Schools won’t see a dime of this revenue.
A TIF district is a special economic zone the mayor effectively controls, and property tax revenue above a certain level from any property located in a TIF goes directly to a special fund the mayor can use to encourage developers to undertake projects.
That leaves taxing bodies such as CPS scrambling for funding to make up for the revenue diverted to TIF funds. And while TIFs are bringing in record amounts of revenue, CPS has turned to the state to make up for its budget shortfall in the form of Senate Bill 1, which would provide a $215 million annual pension bailout and other carve-outs worth millions to CPS. This would force downstate taxpayers to bail out Chicago after more than 20 years of district mismanagement, skipped pension payments, excessive borrowing and unaffordable teacher contracts.
How to fix the problem
Chicago and Illinois can fix these problems without passing their local burdens on to taxpayers across the state. By eliminating TIFs, funding would be freed up to help school districts like CPS in the short term. Municipalities and school districts must also enact pension reform to address their ever-growing burdens.
TIFs serve as another example of fiscal mismanagement by Chicago. State taxpayers shouldn’t have to pick up the tab for irresponsible budgeting practices that benefit connected developers. Until Chicago and Illinois get rid of these slush funds, municipalities will continue to force taxpayers to make up for shortfalls while a select few benefit.