Mayor Richard Daley’s proposed 2011 budget plan will draw from TIF funds and money from the 2008 private parking meter deal to avoid raising taxes this year.
Under Daley’s plan, which was announced Oct. 13 at a special City Council meeting, $120 million will be borrowed from the parking meter lease funds, leaving $76 million remaining in that account. In addition, Daley said no funds would be used from the Skyway reserve account to balance the budget.
Daley also proposed declaring a $180 million TIF surplus, which, in addition to providing the city $38 million toward balancing the budget, would also give $90 million to the struggling Chicago Public School system.
“The fact is TIFs work,” Daley said.
Ald. Brendan Reilly (42nd) agreed with the TIF surplus proposal, citing the assistance it would provide to CPS.
“It’s declaring a surplus and then basically sending that increment, those tax dollars back to the original tax bodies. Fifty percent of the money from TIF would go to the Chicago public schools,” he said. “So declaring a TIF surplus actually does a tremendous bit of help to Chicago public schools while also helping the city stabilize its budget.”
In order to balance their own 2011 budget, CPS will have to reduce after-school programs and decrease funding for magnet programs. CPS will also be unable to restore the 1,000-plus central office and citywide jobs cut since February 2009.
CPS spokesman Bobby Otter said $90 million would be significant for CPS, but he would not speculate further as to how the money will be spent if it is approved.
Reilly also emphasized that TIF funds are generally used to subsidize development plots in neighborhoods, and, since private development has been slow, those funds should be put to other uses.
“No one’s developing. So that increment’s sitting there and these funds aren’t used. There are no plans. So in the short term, we should surplus an extra year or two the majority of our balance,” he said. “Those funds replenish every year and within 18 to 24 months we’ll get that money back. During these very difficult times, we shouldn’t be letting a billion dollars sit in TIF funds.”
Rachel Weber, a professor of Urban Planning and Development at University of Illinois at Chicago, cited the city’s lack of regulation and transparency when it comes to TIF policy.
“This area of allocation is one of the least regulated and least transparent, so the city has a lot of discretion in how it uses those funds and you know, the determination as to whether those funds are indeed surplus,” she said.
Weber said the mayor’s plan to declare a TIF surplus makes sense as a temporary solution to the budget deficit.
“In this case, where I think there’s sort of growing hostility to the city’s TIF program and certainly a serious budget crisis and deficits on the part of the city, that it looks like a relatively painless way to fill that budget gap to some degree,” she said.
Ald. Robert Fioretti (2nd) did not share Reilly’s enthusiasm for Daley’s budget plan.
“It’s a budget that gets by. It borrows heavily on the future. Next year will be a very difficult budget that faces the city,” said Fioretti, a mayoral candidate.
The City Council has until Dec. 31 to vote on the proposed budget.