City Proposes Tax Hike to Fund Schools, Daley Calls it an Abatement

Daley, you stupid bastard. This money should come out of the TIF slush fund, which siphoned it off from the schools to begin with. Despite what our crook mayor and useless aldermen insist, this is concrete proof that TIFs raise property taxes. When I refinanced a few months ago my place was appraised at a predictable 10% less than what I paid for it. My taxes, of course, are still increasing as they have every year, while the ecconomy has tanked and services have fallen off.

Blue, I don't have time to address all of your questions, but this article addresses alot of it. My comments are bold:

TIFs for Dummies (I'm not implying you're a dummy, it's the name of the article).

OK, one more time—let's review how this sucker works. When the City Council approves a TIF—always with Mayor Daley's blessing—it freezes the amount of property tax dollars the schools, the parks, the county, and other taxing bodies get from that district for 23 years. If the schools were getting $100 from a TIF district when it was created, that's roughly all they'll get until the TIF expires. Any extra tax money, generated by rising assessments or new development, goes into the TIF fund, which Mayor Daley is free to use largely as he wants.

I do see this as siphoning, and I see it as the mayor's slush fund, because the city council goes along with whatever he wants to do. This is why teachers may not get a raise, but millions go toward renovating a building downtown for a private company.

Think about this. If the schools, parks, and county can only get $100 from a TIF district, what do they do when their expenses go up to $200? They have to raise their levies—the amounts they each get from the property tax pie—to compensate for the money diverted to the TIFs. When they do that, property taxes go up. No matter what the city tells you, TIFs are tax hikes, plain and simple—the more you create, the higher taxes go.

Also, from this article:

From Daley's standpoint, the beauty of the program is that other taxing bodies do the heavy lifting while he controls the cash. And because TIF funds aren't included in the city's annual budget or broken down on tax bills, he can act like they don't exist. Last year Daley stated in his annual budget address that he was levying about $720 million in property taxes. In fact, as the new figures show, the city extracted more than $1.2 billion.

According to Orr's report, TIFs swallowed more than $500 million in 2006. That's up almost 30 percent from the roughly $387 million collected in 2005. And while the coffers expand—the 2007 take should easily exceed $600 million—the mayor's new budget hits us with a property tax increase of $83.4 million next year.

Okay, so there is existing money in various reserves, to the tune of $895 million at the time that article was written, or about the same amount as the CPS budget shortfall for next year. Who knows what's been spent or collected since, but it seems reasonable to assume that at least some portion of that money still exists somewhere. That answers my first question.

It doesn't address my second or third questions nearly as well. I see the point that schools are screwed if their expenses go up, but it seems that this would be the case regardless. Erase the TIF, and you still have a situation in which schools are faced with a budget shortfall if their expenses rise faster than property values, which is in fact what has happened the last few years as property values have fallen. The only way the TIF would have anything to do with this situation is if the activities the TIF funds have paid for have contributed to school expense ... if, for instance, the TIF has brought more residential units into a neighborhood leading to an increase in school population (which surely has happened in some TIF districts, though probably not all).

From this, then, it seems reasonable to conclude that while TIFs have prevented schools from getting additional money they should have gotten during the recent housing boom, they don't have the same effect anymore now that the boom has busted and the property tax base has fallen. Thus, the budget shortfall CPS is facing next year would have happened regardless.

Except that property taxes have not fallen. They have risen. Another great thing about our state, county and city is that property taxes do not rise and fall with property values. But that's a whole 'nother can of worms.