Thursday, October 22, 2009

TIFs on the air, plus how TIFs drive up taxes and inequality

Posted By on 10.22.09 at 01:54 PM

Via Progress Illinois, last night and this morning found TIFs a hot topic on Fox News Chicago and WTTW:

Andy Shaw discusses the role of TIFs in doling out corporate welfare. I don't disagree that it's in some cases unwarranted, but that's not the whole problem. To repeat myself:

"Since 1984 TIF districts located downtown, on the Gold Coast, and on the near east and west sides have collected more than $1.35 billion that would have otherwise gone to the schools and other strapped taxing bodies. The Central Loop TIF, the granddaddy of them all, has reaped $875 million alone. Meanwhile, as you might expect, TIF funds established in truly deserving neighborhoods are puny by comparison. Englewood's two TIFs have gathered only about $20 million between them, though one of them dates back to 1989. Woodlawn's TIF fund has collected under $10 million after six years; Pullman's has less than $20,000 after seven."

Okay, bear with me:

If TIFs work as intended, the "extra" tax revenue is driven back into that specific neighborhood. Therefore neighborhoods that will "naturally" generate more tax revenue (and the natural increase can be related to TIF-funded development, but also Alan Greenspan, AIG, and the price of tea in China) will siphon off more money from the city tax base than the more blighted neighborhoods that the program is theoretically intended for. Thus, in some ways, the system works in reverse - the money pools in districts with more and/or more valuable properties.

Since this draws away from tax revenue that would go to citywide services, taxes then have to go up to make the tax base more level. As Joravsky puts it:

"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."

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