CHICAGO - Tax increment financing districts collected nearly $900 million in Cook County last year, including about $555 million in Chicago, according to a new report by county clerk David Orr.
The TIF revenue - which is diverted from coffers of taxing bodies to fund projects within the districts - represents a nearly 11% jump from 2006 at a time when both the city and the county face structural budget deficits stemming from dwindling tax collections in other areas and rising costs.
Cook County has 402 TIF districts, of which 155 are located in Chicago. Nearly two-thirds of the TIFs saw revenue jumps in 2007 compared to 2006, according to the report.
Orr's report said the amount of money being diverted into the area's TIF districts calls for greater transparency in how the money is reported and used.
"Because so much tax revenue has been going to TIFs, they have become the subject of controversy and debate," Orr wrote. "There is too little disclosure on how TIF monies are spent."
Once a municipality establishes an area under state guidelines as a TIF district, property taxes are frozen at their current levels and any new revenues that are generated - usually from new development within its boundaries - are set aside and invested within the district to spur further growth for the 23-year life of the designation.
Critics note that TIF districts divert taxes from other taxing units, such as schools and parks, and that there is little information or oversight on how the money is spent. And while TIF districts are intended to spark development in blighted areas, opponents say that increasingly the districts are set up in non-blighted areas, such as downtown Chicago.
"If you're going to spend almost a billion a year, it should be required to be run through the municipal budgets, and it should be on the tax bill," Cook County Commissioner Mike Quigley said in an interview Friday. "It's a lot of money, and it's dramatically impacting tax rates, and it's just not good government."
Quigley said he plans to introduce legislation to the county board this year that would require TIF district and revenue information on tax bills.
If the funds were accounted for as a separate district, it would be the second largest amount of tax revenue in Cook County, according to Orr's report. Quigley said state lawmakers are also considering TIF reporting reform, and that the Chicago City Council should take on the issue before the state does.
"If there is increased transparency and accountability, you're going to have fewer TIFs. Reform will move everything else along," he said.
Since 1986, Chicago's TIF districts have generated more than $3 billion, and its 2007 TIF revenue - $555 million - represents more than two-thirds of the city's property tax levy, according to Orr. So far in 2008, 15 new TIF districts have been added in Cook County, four of them in Chicago.
The city has frequently borrowed against future TIF revenue to aid in development projects. Two years ago, Mayor Richard Daley announced a $1 billion school construction program that relies on issuing $600 million of general obligation bonds and repaying them with TIF revenues. The county does not borrow against its TIF revenues.
Chicago's most lucrative TIF, the Central Loop district, is set to expire at the end of the year, but Daley is creating a new downtown district to spur redevelopment in the LaSalle Street financial district.
Facing a $469 million deficit, the mayor recently introduced a nearly $6 billion budget, featuring nearly 1,000 layoffs, that he called one of the most difficult in his two decades in office. The deficit stems from a dramatic slowdown in revenue collections. Daley also warned that the city faces a roughly $200 million annual structural deficit through 2012.
While Cook's fiscal position is benefiting from a recent 1% sales tax increase, county President Todd Stroger also warned recently that it faces a growing structural deficit. However, he said he would not raise taxes in his 2009 budget, set to be introduced this month.
