Politics
Share of Chicago Property Taxes Claimed by TIF Funds Set Another Record in 2023: Report
(WTTW News)
The share of property taxes collected by the city and then claimed by Chicago’s tax increment finance districts grew 5.3% in 2023, setting a new record for the fourth year in a row, according to a new report by Cook County Clerk Cedric Giles.
Despite the growth it is unlikely there will be enough unspent, unclaimed or left-over funds in the districts, known as TIFs, to balance the city’s cash-strapped budget or solve the financial crisis engulfing CPS.
In all, $1.36 billion poured into the city’s 124 TIF funds in 2023, according to the annual report from the clerk’s office posted online in July with no public notice.
That accounts for approximately 42% of the nearly $3.24 billion in property tax revenue banked by Chicago officials, according to data compiled by the clerk’s office.
Eleven TIF districts each collected more than $20 million in 2023 for a total of approximately $853 million, according to the report. Nine are located downtown, records show.
A perennial source of controversy, TIFs are back in the spotlight as Chicago leaders scramble to close a budget gap of $223 million in 2024 and a projected shortfall of $982 million in 2025 by the end of the year. Chicago Public Schools CEO Pedro Martinez has asked city officials to give the school district approximately $482 million to cover the cost of new contracts with two unions and make a payment into the pension fund for non-teacher employees.
Mayor Brandon Johnson is set to unveil his plan to address the city’s fiscal crisis on Oct. 30, and is expected to declare a record amount of money in the city’s TIF accounts are not immediately needed to fund projects designed to reduce blight.
Those “surplus” funds will be returned to the city and other taxing agencies, with half going to CPS. The budget approved by the school board for 2025 anticipates getting at least $160 million in surplus funds from the city’s TIF districts. That includes $62 million to cover the cost of the recently ratified SEIU Local 73 contract and $97 million for district operations.
If the surplus set to be declared by Johnson keeps pace with the flow of property tax revenues into Chicago TIF’s, it would reach at least $456 million based on 2023 receipts, which officials will use to calculate their 2025 budgets because of when those bills are paid by property owners.
That would send $228 million to CPS, less than half of what Martinez has said the district needs to avoid deep cuts and layoffs during the 2025-26 academic year.
Johnson has proposed borrowing approximately $300 million to cover those costs and pay the district’s pension bill, but Martinez has called the proposal backed by the mayor “exorbitant” and fiscally irresponsible.
Martinez said he refused Johnson’s request to resign more than a month ago after relations between the two soured over the budget fight and Martinez’s decision to craft a list of schools that could be closed to save money. State law prohibits any CPS schools from being closed before Jan. 15. A resolution passed by the CPS board extends that moratorium for an additional two years, through the 2026-27 school year. Martinez’s contract is set to expire on July 1, 2026.
Johnson appointed six new members to the Chicago Board of Education on Oct. 7. They have the power to fire Martinez and amend the district’s 2025 budget.
Sending more TIF funds to fill CPS’s budget gap would not only need the mayor’s support but require projects already approved to be canceled, or to find another source of funding. That would require the approval of Chicago City Council members.
No alderperson said they were willing to cancel projects planned for TIF districts in their ward to help fill CPS’s budget deficit, although a majority of alderpeople have said they oppose Johnson’s plan to borrow.
Since their creation in the mid-1980s, TIFs have been beloved by City Council members for providing a dedicated fund for a host of programs, ranging from road improvements to school additions and expanded park facilities. Those projects are not OK’d without the approval of local alderpeople, giving them a large amount of power at City Hall.
For many years, TIF districts have claimed a growing share of city property tax revenues, fueling the debate over whether the districts, which work by capturing all growth in the property tax base in a designated area for 23 years.
The equalized assessed value of properties in Chicago rose 2.84%, boosting property tax revenue, according to the clerk’s report.
The growing share of city property taxes sent to TIF districts is sure to fuel the argument over whether the districts, which capture all growth in the property tax base in a designated area for 23 years, actually spur redevelopment and eradicate blight or serve to exacerbate growing inequality in Chicago.
The transit TIF district formed by the city in 2016 to fund the renovation of the CTA’s Red and Purple train lines is once again the city’s highest-grossing TIF, according to the report.
The transit TIF has generated approximately $1 billion since 2016, including $202 million in 2023, a 9.8% increase as compared with 2022.
Chicago now has two transit TIFs, the second to fund the extension of the CTA Red Line south from 95th Street to 130th Street. That TIF collected $12.1 million in its second year, more than double what it collected in 2022, according to the report.
Earlier this year, the City Council approved a plan backed by Johnson to phase out the city’s decades-long reliance on TIFs by borrowing $1.25 billion during the next five years and use those funds for a wide-ranging slate of projects designed to expand the supply of affordable homes and good-paying jobs.
Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]
