Our Taxes and TIF Reform

MICHELE SMITH ON THE ISSUES

We pay the highest property taxes in the city outside downtown. Where are those taxes going? Our City budget deficit is over $500 million dollars - yet over $700 million dollars are currently in the TIF system. The discrepancies in the system demand real answers.

First introduced in Chicago in 1984 during Harold Washington’s time as mayor, Tax Incremental Financing (TIFs) was seen as radical way to promote development in neighborhoods by making them self-sufficient. The plan was simple: developers borrowed against the projected increased property taxes generated by new development to pay for the development itself. For 23 years the increased property taxes would go into a special fund, a TIF fund that would be used to finance additional projects such as job training, child care, and so on that would benefit the community contained in the TIF district.

Unfortunately, since Washington’s time, TIFs have strayed from their original purpose. Under Washington, a TIF was created with a specific project in mind and then dissolved once the goals had been met. Today, TIF districts cover 30% of the city with unspecified purposes, creating a slush fund to be used as the city wants, without accountability to the taxpayers or without an opportunity to weigh the use of those funds against other pressing needs.

TIF money does not come out of thin air. You don’t get something for nothing. When the city creates a TIF it freezes the property taxes in the district and gives the TIF fund the difference. This means that for 23 years the taxing entities such as the City and the Chicago Public Schools are deprived of those revenues and in response have had to raise property taxes throughout the City.

The time has come to return TIFs to the community and to have real transparency about the use of TIF funds. The Sunshine Ordinance requiring the City to make TIF information available to the general public was a good start – and much more needs to be done. There should be no question as to where our money is, how our schools are funded, and why corruption is still rampant in a program originally created to help people. TIFs need to serve the community and to do so they need to remain in the community and be governed by community needs and expertise.