Editorial: Declare TIF surplus to plug city, school budgets

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Updated: November 16, 2011 10:06AM

Across Chicago, teachers are being denied raises, vital services are being cut and workers are being laid off. Meanwhile, millions in taxpayer dollars, possibly hundreds of millions, collected from more than 150 city tax increment financing districts sit dormant.

It’s time to put those dollars to good use. As Mayor Rahm Emanuel is fond of saying, you never want a serious crisis to go to waste. The crisis, of course, is massive budget holes at every level of government.

A group of aldermen led by Scott Waguespack (32nd) introduced an ordinance this week to take 50 percent of all surplus TIF dollars — money that hasn’t been committed to build streets or schools, help open a businesses or otherwise spur economic development — and distribute it to the schools, the Park District, City Hall and other smaller government bodies.

We know this is a short-term budget solution. Surplus dollars will simply plug a few holes at City Hall and the schools. But at a time when the dam is breaking, we see few compelling arguments for holding back. Declaring a surplus, it is important to note, will not significantly undercut TIF funds. TIF development work can continue, with roughly $500 million in new dollars pouring in each year.

In TIF districts, property values are frozen for 23 years. Any revenue growth created by rising property values is put into a special fund for economic development instead of going to seven taxing bodies, including the city colleges and Cook County. Those taxing bodies make up for lost revenue by increasing tax rates.

Former Mayor Richard M. Daley rocked the political world last year when he gave up some of his cherished TIF dollars, siphoning off $180 million in surplus dollars. Under a set formula, the schools get about 50 percent of surplus TIF dollars and the city gets about 20 percent.

In truth, there’s nothing radical about declaring a surplus — it’s allowed under state law — and Chicago should do it again this year. In a report released in August, the mayor’s TIF reform panel advocated for regular reviews of TIFs that could result in the city declaring surpluses for successful TIFs. (This was part of a larger package of reforms that included setting clear TIF goals, greater transparency and more rigorous monitoring.) In addition, the Civic Federation, noting the city’s budget crisis, said declaring a TIF surplus this year was acceptable if surplus is available.

Emanuel has been resistant to declaring a surplus, dismissing it as a short-term, Band-Aid solution. He prefers wholesale reform of TIFs, which would likely include a long-term, predictable policy on declaring surpluses. We’re all for it, but today’s budget crisis demands quick action.

Emanuel, though, may be coming around. After much badgering, his spokeswoman offered us this statement: “The Mayor’s Office acknowledges the consensus around declaring a surplus to ensure taxpayer dollars are invested in the city rather than sitting in savings accounts.”

We aren’t sure the surplus ordinance pushed by the teachers union and the Grasssroots Collaborative group is the right vehicle for accessing surplus dollars, though it appears to strike a good balance.

But we do know this: Now is not the time to let even a dime of taxpayer dollars sit idle.