Chicago city government faces a two-year deficit of at least $469 million, with additional massive shortfalls looming through 2012. Mayor Richard Daley has proposed some draconian steps: laying off over 900 city workers, eliminating over 1,300 unfilled positions, raising city amusement and parking taxes, and imposing six days of unpaid leave on “non-essential” city employees.
Daley blames the unexpectedly large deficit on the economy, but others are citing causes the mayor is not eager to discuss, such as the city’s overuse of tax increment finance districts (TIFs). Chicago had 37 TIF districts in 1997; it now has 155; they can last 23 years and even be extended 12 years beyond that.
The original purpose of TIF in Illinois was to help genuinely “blighted” neighborhoods. However, under Daley, Chicago has been a leader in making TIF an all-purpose development and attraction tool even in already thriving or growing parts of Chicago, including the commercial/financial powerhouse called the Central Loop.
In their analyses of the city’s budget crisis, both dailies, (the Tribune and the Sun-Times), and an alternative weekly (the Reader) have all cited TIF’s massive diversion of property tax revenue –now $500 million annually –from city services, schools, parks and other local services.
The revived debate over TIF’s harm to public services is a tribute to the now-defunct Neighborhood Capital Budget Group. As their ground-breaking 2001 study “ Who Pays for the Only Game in Town? revealed, many Chicago TIFs are in areas that were the opposite of blighted. Now the high price of diverting revenue from areas that were already rising in value without the TIF boost is coming home to roost.
Despite these pressures, Mayor Daley stands by his TIFs, telling Tribune editors: “If we didn’t have that [TIF], we’d be in deep (bleep).” But some change is evident. The city recently dropped efforts (described in the earlier blog The TIF That Won’t Die?) to extend by 12 years the massive Central Loop TIF district when Gov. Blagojevich reportedly demanded more disclosure on its “winners and losers.”