I do not mind paying my fair share of property taxes to fund various government services, especially education and health care. However, I take serious exception to being taxed twice and not fully knowing where my property tax dollars are being spent. In my opinion this is the net effect of the more than 140 tax increment financing (TIF) districts created within the city of Chicago.
Since 1977, Illinois state law has allowed municipalities to establish TIF districts as a tool to jump-start economic and housing development in blighted communities. Tax dollars are given to developers as subsidies to lure new retail and commercial structures, as well as infrastructure improvements, job training, and landmark preservation.
Once a TIF district is established, it freezes the amount of property taxes the city, schools, parks, county, and other taxing bodies can take from the area for 23 years, diverting any new revenue resulting from increased property values or new development into funds overseen by the city.
This diverting of tax dollars possibly contributed to the Chicago City Council voting to increase Chicago property taxes by $83 million. The Chicago Board of Education has raised property taxes to its maximum tax cap. The Chicago Park District has cut back on both staffing and programs, and has increased or implemented new fees because of the revenue it is losing to the TIF fund.
Because TIF districts divert tax dollars from the city, county, and schools, there needs to be more transparency and objective analysis of any TIF.
Take, for instance, the Central Loop TIF, which encompasses much of the downtown area around city hall. Created in 1984, the Central Loop TIF district was the first TIF district. In 1984 the equalized assessed valuation (EAV) of property within the boundaries of the Central Loop TIF was $98.5 million. The 2005 EAV was 2.6 billion (an increase of 163 percent).
It could be concluded that this was a very successful TIF because of the revitalization of the downtown area, and the tax dollars diverted from the TIF would go back to the schools, parks, and the Cook County health care system. Oh no! The city extended the Central Loop TIF district for another 23 years. The balance of tax dollars within the Central Loop TIF for fiscal year 2006 was $123,268,130 million. If the TIF were not renewed, the Chicago Public Schools could potentially reap $60 million a year. Multiply $60 million by 23 years. This is the amount of tax dollars CPS has to make up by using its taxing authority to keep the school system afloat.
In practice, we are being taxed twice.
There is progress in elected officials understanding the need for TIF transparency and analysis. Go to Cook County Clerk David Orr’s website at cookctyclerk.com to see that the city has $500 million of tax dollars sitting in the TIF account without being disclosed within the city budget.
State Representative John Fritchey (D-Chicago) announced legislation (HB 4815) that would require that Cook County taxpayers be given information with their tax bills about how their taxes are impacted by the numerous existing TIF districts.
We have the right to know how much revenue CPS, parks, and Cook County are losing to the TIF districts on an annual basis. Greater public input and transparency is needed.