The TIF wash—et tu, Bright One? | Bleader

Tuesday, June 18, 2013

The TIF wash—et tu, Bright One?

Posted By on 06.18.13 at 07:37 AM

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Rahm Emanuel addressing the Clinton Global Initiative last Thursday, June 13
  • AP Photo/Scott Eisen
  • Rahm Emanuel addressing the Clinton Global Initiative last Thursday, June 13
Over the years I've heard just about every conceivable explanation and defense of the $450-million-a-year mayoral slush fund known as tax increment financing.

On Friday I heard a new one: it's "a wash," financially speaking, for the Chicago Public Schools.

I found that conclusion in an editorial in my Sun-Times, home delivered as always. Reading this over my morning coffee was a truly disheartening way to start my weekend.

In any regard, the editorial ran under the headline "How CPS got into its financial mess."

The basic premise is that the schools have been broke, are broke, and probably always will be broke. At the moment, Mayor Rahm's dealing with this state of brokeness by closing schools, raising the maximum class size, firing teachers, and replacing older, higher-paid teachers with younger, lower-paid ones who can look forward to being fired just as soon as their salaries rise.

In short, the mayor's divesting in public education at the very moment that everyone—well, almost everyone—wants him to invest in it.

Back to the Sun-Times editorial.

After talking about big pension bills, declining state and federal aid, and the property tax cap, it had this to say about TIFs.

"And if there are revenue losses caused by TIFs, CPS partially makes up for them by raising property tax rates. The presence of TIFs triggers a bump in state aid. A portion of TIF money also goes for school construction—$920 million to date, CPS says. TIFs, in the end, are likely a wash for CPS."

Oh, my Bright One—my beloved Bright One—how could you write this?

OK, let's break it down. Follow closely, people—especially members of the Raise Your Hand Coalition and other groups who are gearing up to go after TIF money to keep Mayor Emanuel from gutting your schools.

What you have to keep in mind is that whoever fed this line to the Sun-Times is likely to feed it to you. So you can learn from this . . .

When the City Council—at the mayor's urging—creates a TIF district, it freezes the amount CPS takes from property taxpayers in that district for up to 24 years. If CPS was getting $100 in taxes when the TIF was created, that's all it will get for as long as the TIF exists. That forces taxpayers throughout the city to pay more in property taxes to compensate for the tax dollars CPS isn't getting from the 160 or so TIF districts the mayor and City Council have felt compelled to create.

Get it?

In effect, a TIF is a tax hike where the mayor raises property taxes in the name of something you presumably want—like schools or parks—so he can spend it on something you don't need. Like a basketball arena for DePaul University, to cite one recent example.

If you want more specifics on how this scam works, read this. Or this. Or this.

Over the last 30 years, we, the taxpayers, have paid roughly $5 billion in TIF taxes. Of which about 54 percent—or $2.7 billion—was taken in the name of CPS.

Of that $2.7 billion, Mayors Daley or Emanuel have spent $920 million on various school-construction projects, according to CPS (let's assume this is one of the rare instances where the mayor's people are telling the truth).

That means the schools gave the mayor $2.7 billion in property taxes and the mayor gave the schools $920 million, which means the schools lost about $1.78 billion in the process.

Which causes the mayor's school board appointees to fall to their knees and say: "Thank you, Mr. Mayor, for giving us a third of the property tax dollars we originally gave to you."

It's like Stockholm syndrome on steroids.

Thus, the mayor's free to spend billions of tax dollars intended for the schoolchildren of Chicago on virtually anything he wants in the name of eradicating blight in low-income communities.

Oh yeah, I forgot to mention that TIF handouts are supposed to be reserved for the poorest of the poor. A definition the city of Chicago manages to stretch to include handouts to the richest of the rich—Hyatt, Grossinger Auto Group, United Airlines, MillerCoors, and now DePaul.

You know, I'm getting depressed just thinking about this.

Anyway, now you know why you keep paying more and more and more in property taxes for the schools only to see the schools go more and more and more broke.

As the Sun-Times editorial points out, CPS does get more money from the state because of the money they lose to the TIFs. This is not something of which to be proud. Instead, it's a tax scam that's almost as cynical and fraudulent as the TIF program itself. As hard as that is to believe.

If you want to know the details, read this.

Essentially, the state sends educational dollars to Chicago to supplement the property tax dollars the city's taking from the schools to give to United, Grossinger, Hyatt, MillerCoors, and DePaul.

And you wonder why the state's broke.

Does the state give CPS enough money to fully compensate for that $1.78 billion lost to TIFs? The last time I looked the answer was no. But really, who the hell knows? It would take a dream team of CPAs with subpoena authority to get to the bottom of this financial quagmire that resembles something concocted by Bernie Madoff.

So, in review . . .

You, the taxpayers, have paid CPS $2.7 billion in property taxes, which CPS gave to the mayor, who returned $920 million to CPS. Then the state presumably gave CPS $1.78 billion to compensate for the TIF money the mayor gave to Hyatt, United, et al. Which means you, the taxpayers, have paid about $4.48 billion in various taxes for schools. Of which the schools got to keep $2.7 billion—tops.

Any way you look at it, at least $1.78 billion—intended for schools—flew out the old TIF window. That's not a wash, my friends—it's a hosing.

In short, the schools are broke 'cause we don't spend enough money on them. And we don't spend enough on them in part 'cause the school taxes we do pay are diverted to things having nothing to do with the schools. As far as I know, it's legal, though it's criminal that it's not a crime.

Here's another stat you might want to consider. At the moment, CPS says its per pupil expenditure is about $13,600.

In contrast, the great private schools in the city—Latin, Parker, Lab School—charge upwards of $30,000 in tuition.

That means the richest of the rich spend twice as much on their students as the public schools do on theirs. That's why they can afford lower class sizes, art, music, theater, and all the other things we say we want but can't afford.

You can't have it all, Chicago. You can't afford afford a top-flight public school system—or even a decent one—while throwing away billions to gazillionaires.

I say, spend the school money on the kids and let the DePauls, Grossingers, Hyatts, Uniteds, and MillerCoorses of the world fend for themselves.

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