Members of Mayor Rahm Emanuel's newly appointed TIF panel will soon roll up their sleeves to start rebuilding city policy on Tax Increment Financing Districts (TIFs). The new mayor has vowed to strip the politics out of TIFs and hold these districts to new job creation and economic standards.
This is a welcome development since Chicago taxpayers have been shelling out $500 million a year to bankroll TIFs. As a long-time critic of TIF budgeting abuse, I want to suggest three reform principles to TIF panel chair Carole Brown and her co-panelists. These principles should go a long way toward returning money to starving taxing bodies and making TIFs more efficient and transparent.
1. Close Some TIFs Early: Examine all existing TIF districts to see if they have served their purpose and can be terminated early instead of running the standard 23 years. Too often they continue with no concrete objectives. Putting TIF district properties back on the tax rolls can return millions of dollars to the Board of Education, the Park District, Cook County, and the City of Chicago.
2. Resist Extensions: A typical TIF property is frozen on the tax rolls for 23 years -- practically two generations of students in a public school. Extensions, which rob neighborhoods of tax dollars for up to 12 more years, should rarely be granted, and only in the most exceptional cases. Thirty-five years is nearly three generations of children.
3. Return Surpluses: Current policy allows TIF surpluses to grow unchecked in districts that have already met their goals. Excess funds are then shared (or ported) to neighboring TIFs, leaving taxpayers in the original TIF uncompensated. While this may have been justified in a very few cases, unchecked surpluses are unnecessary slush funds. In today's crippled economy, surpluses are better returned to governmental budgets, and spent on schools, parks, police and public transportation, rather than treated as mad money.
The city of Chicago is out of balance. On one hand, we have budget deficits; on the other, we have a billion TIF dollars in accounts with little accountability. They've been used as giant kitties for dealmakers to spend on conventions, upscale neighborhoods and the illusory Olympics.
We must change our philosophy. TIFs must have specific purposes for justifiable developments in blighted areas. By no means should we punish needy neighborhoods that deserve TIF dollars, but we simply can't afford to maintain the status quo.