Archive for March, 2009

Chicago Aldermen Want a Brighter Light on City’s TIF Spending

March 31, 2009

A specter is haunting Chicago City Hall-the specter of transparency for the city’s massive Tax Increment Financing (TIF) program

Last month two city aldermen—Manny Flores and Scott Waguespack—introduced a resolution to create an on-line TIF disclosure system that gives easy access to project budgets and actual spending ( including financing terms, dates, amounts, recipients and purpose) and that includes both weekly payroll data and periodic job creation reports for TIF districts.

Flores and Waguespack introduced the legislation after they tried to get employment and other data for the Republic Windows factory, which had been occupied by laid off workers protesting the company’s attempt to cheat them out of severance pay and health benefits.

The aldermen wanted the data to determine if the city should retrieve its subsidies for the Republic factory, which was closed in favor of a lower-wage site in Iowa. Chicago government had provided $9.5 million in TIF assistance for the plant, based on Republic’s pledge to create and maintain over 600 jobs until 2019.

That even members of city council have to struggle to get basic TIF data comes as no surprise. Chicago Reader reporters Ben Joravsky (since the Neighborhood Capital Budget Group’s demise the most trenchant critic of city TIF abuse) and Mike Dumke described in almost farcical terms the bureaucratic delays and incomplete data that met their own request for the same employment data.

In Illinois, TIF districts are created for areas designated as “blighted.” Increased property tax revenue from development (the “increment’) in a TIF district is reserved for further economic development in the same district for as long as 23 years (sometimes longer), rather than shared among local taxing authorities like schools and park districts.

However, in Chicago TIF has become an all-purpose business incentive benefiting companies and developers in areas that are already affluent, like the city’s Central Loop. According to Cook County Clerk David Orr, since the 1980s city TIF districts, which now number about 160, have diverted about $3 billion in revenue. The Daley Administration now controls what critics call a $550 million TIF “slush fund.”

In a city where reform measures are often DOA, the resolution introduced by Flores and Waguespack at least produced a March 16th public hearing before the City Council’s joint economic development and finance sub-committee. Speakers supporting the sunshine resolution included Professor Rachel Webber of the University of Illinois-Chicago, a nationally noted TIF expert, who cited Minnesota’s requirements for TIF disclosure, and community development consultant Valerie Leonard, who described how the city TIF documents currently posted frequently contain blank pages, and how TIF job creation data for North Lawndale, a depressed but developing community with seven TIF districts, was unavailable.

Unintended comic relief was provided when the city planning department’s deputy commissioner touted (via online demonstration) the TIF data already provided by the city. His presentation backfired when the only data he could pull up was outdated. When questioned about other data that had been available on-line, he admitted it had been removed. Dan O’Neil, an expert on making government data publicly available in usable formats, offered to construct a city TIF disclosure website for free.

Although no one testified against the reform measure, Alderman Margaret Laurino, the chair of the economic development subcommittee chair, tabled it: “We want people to have access to information, but we don’t to overwhelm them…It’s something we don’t want to rush into.” The comment from the Chicago Sun-Times, which supported the TIF sunshine measure, was apt: “This from a City Council that can approve a $1.2 billion deal to lease the city’s parking meters after about an hour of debate “

Fake concern over drowning policy wonks with complete data aside, Laurino’s action represents the “business as usual” deference to the Mayor, who successfully blocked efforts to subject TIF beneficiaries to the reporting requirements of Illinois’ 2003 subsidy disclosure law. But with ‘transparency” an increasingly powerful theme on the state and national level, Chicago officials and citizens may be less willing to be kept in the dark.

SunCal TIDD Bill Defeated in New Mexico

March 27, 2009

roundhouse2The New Mexico state legislature’s photo finish defeat of Senate Bill 249, a $408 million TIDD bond bill for embattled developer SunCal, sent shock waves through the Roundhouse (home of the state legislature) and the development industry late last week. The bill died on a 33-33 tie vote. A motion to reconsider was also tabled by a tie. We’re told that the outcome was so surprising that one SunCal lobbyist (of 12 registered) gasped upon hearing the final vote.

This year’s version of the TIDD bill attracted extra attention after it was brought to light that SunCal was potentially in violation of state law requiring disclosure of lobbying expenses. Also controversial was the fact that over half of SunCal’s (and its affiliates’ and subsidiaries’) 40 developments are progressing toward bankruptcy as a result of crashing real estate markets and investments made in the company by failed financial giant Lehman Bros.

You can listen to the legislative proceedings and final vote here. One of the main concerns of many legislators was the potential of the proposed massive development to pirate jobs and businesses from other areas in the state. State representatives delivered impassioned arguments against bill on the grounds of tax and budget fairness, fiscal responsibility, protecting education, human-centered development strategies, preventing regional economic distortions and subsidy creep.

Sharon Kayne of New Mexico Voices for Children believes that “it was just a matter of educating the public and legislators of what the very real, very bad consequences could be.” Hopefully it was a lesson not soon forgotten – if history is any indication, SunCal will be back again next year with its hands out at the Roundhouse.

Million-Dollar Profits, Ten-Dollar Tax Bill

March 11, 2009

The Oregon Center for Public Policy found new data showing that more than 5,000 profitable corporations operating in Oregon paid no more than $10 in corporate income tax for 2006. Among this group, 31 corporations each recorded profits of over $1 million.

OCPP policy analyst Michael Leachman emphasizes the need for the Oregon Department of Revenue to disclose the names of these corporations: “By shining light on the system, Oregonians can see which big, profitable companies are good corporate citizens and which are not.” We need to know, stresses Leachman, “Which ones are playing us for fools?”

When corporations get lower tax rates they are contributing less to the cost of public services, thereby shifting more of the burden onto individual taxpayers. The current share of income taxes collected from corporations operating in Oregon is projected to be around 6 percent during 2009 to 2011, compared to the 18.5 percent in the mid 1970’s.

Leachman notes that a larger number of corporations are paying more than the $10 minimum, but still less than the typical Oregon household. “The system has gone awry when a profitable corporation pays less in income taxes than a single mother working at a minimum wage job,” Leachman notes. “When corporations don’t pay their fair share, working families and small businesses are forced to pick up the slack”

Corporate tax dodging is occurring across the country and across industry sectors. The data from Oregon is part of a larger pattern of declining corporate contributions to the cost of public services. In his book, “The Great American Jobs Scam,” Greg LeRoy examines how this pattern developed over the last 25 years, particularly due to large corporations with the resources to aggressively pursue lower income tax rates. With widespread budget shortages and physical infrastructure in such dire need of maintenance and repair, we can not afford to let corporations dodge their share of the cost.

Getting the Most Out of

March 6, 2009

recoverydotgovOne hundred fifty million. That’s the number of hits the Obama Administration’s website has received since it went live only a couple of weeks ago, according to an Office of Management and Budget (OMB) official testifying yesterday before a Senate committee. It’s clear that the American people have a hunger for information about the Recovery Act that so many are counting on to help propel the country out of the current economic slump.

The Administration has committed itself to making the economic recovery plan transparent and accountable, but as with all complex undertakings, the details will make all the difference. The new Coalition for an Accountable Recovery (CAR)—co-chaired by OMB Watch and Good Jobs First—is bird-dogging those details.

CAR has just submitted a 15-page memorandum to OMB providing an initial set of recommendations on how the Recovery Act reporting system should be structured. Our key proposal is that the system should capture information from all public and private-sector organizations through which Recovery Act funds flow—every “ultimate organizational end-user” of the money.

In other words, every contractor, subcontractor, and sub-subcontractor would simply enroll and report through one central online registry. That data would be accessible to the public in raw form as well in a machine-readable format that, through a system of tagging, will allow results to be automatically aggregated. Any user would be able to search for and display information by state, by city, by agency or corporation, by project, by ZIP code, etc. As we said last week, we want millions of eyeballs on the money. And it sure looks like millions of eyeballs are ready to go!

Since job creation is one of the primary goals of the Recovery plan, the memo includes recommendations for collecting meaningful information not only on the number of jobs but also their type and quality. This means gathering company-specific data on total hours of work generated (by broad occupational categories), number of workers, total payroll and extent of healthcare coverage.

CAR intends to refine and amplify its recommendations to OMB as the process moves forward and those hit numbers rise into the billions.