Tuesday, October 27, 2009

Is Mayor Daley's Billion Dollar Slush Fund Broke?

Originally posted at Examiner.

As the City of Chicago's $500 million budget gap has come to the forefront, eyes have begun to peer behind the curtain of the somewhat bewildering subject of the City's TIF Districts. There is a lot of money out there somewhere. The reasoning is that it should be reallocated to help cover the budget gap. The Chicago Reader calls the TIF program Mayor Daley's Shadow Budget.

We recently came into possession of hard evidence of what we've long argued: that the city produces two annual budgets, one released to the public, covered by the media, and debated by the City Council, and the other forged behind closed doors by the Daley administration, shared only in pieces with certain aldermen, and never fully disclosed to citizens. Both budgets are funded by taxpayers.

For the last few years, we've been trying to force the city to open up that shadow budget, which is funded by property taxes diverted into Chicago's tax increment financing program. As regular readers know, the TIF program is a complicated system in which property tax dollars in designated districts are collected in special accounts that are supposed to be used to eradicate blight and bolster development where it might not otherwise come.

Daley administration officials insist that the program has been a huge success and that everything the public needs to know about it is available on the city's Web site. But many aldermen have started to disagree publicly with the administration—a rarity these last 20 years—and in April the City Council unanimously passed an ordinance requiring that additional documents and data showing the use of TIF money be posted online.

The City of Chicago has indeed posted a tremendous amount of information about its TIF Districts on its website. The problem, as with most government websites, is that the data posted is not open source, meaning that it's not readily usable by the public. All 162 TIF districts are on the City's site, all with audited financial statements and summary level reports provided by the Department of Community Development. Each TIF district's funding agreements that are in place are also posted. These are the agreements whereby money is allocated to redevelopment projects. The issue with the City's website is that it is confusing, some links are broken, and everything is posted in PDF format. The City has also commissioned a myriad of different accounting firms to perform the audited financial statements on each individual district. As such, there is no congruent, master financial data provided. This takes a lot of browsing through a confusing website structure, and a lot of downloading and compiling of data. The Windy Citizen did it in 2008 (for Fiscal Year 2007) and created a great informational tool in its TIF district map. Now, I've compiled the data for FY2008 in Excel. The story that data tells is intriguing to say the least.

Focusing on the Department of Community Development's summary level reports, one finds that in 2008, the TIF collected $545,753,147 in revenue, and spent $468,631,911. The fund as a whole therefore recorded a gain for the year of $77,121,236. The summary level reports also portray each TIF district's net balance. This is the total money in the bank, as it were, that each district has on hand. At The fund as a whole showed a total net balance of $1,249,217,223. In its summary level reports, the Department of Community Development also addresses the TIF's "Planned Minimum Expenditures." Each district's summary report tells how much money is intended to be spent. The assumption behind this is that agreements are either already in place, or are close to being in place. The Reader's Shadow Budget article bears this out:

Many of the items in the TIF budget seem to be pretty far along. Most are categorized as "appropriated," meaning the expenditure has already been approved or finalized, or "committed," meaning it's "locked in" or expected to be shortly, according to community development department spokeswoman Molly Sullivan, who provided written answers to our questions about the documents after her department declined our FOIA request. Fewer projects are listed as "pending," meaning they've been proposed.

"The designations are informal and used only for budgeting and planning purposes," Sullivan wrote. "There is nothing binding about the terms in this context; they are in fact determined by DCD TIF staff as a way to prioritize potential expenditures."

But that's not substantially different from the way it works with the city's official budget, which the mayor publicly introduces as a set of "recommendations" and which changes throughout the year depending on how closely projections meet reality.

Planned minimum expenditures total out to $1,304,671,279. These committed costs put the City of Chicago's TIF fund $55,454,056 in the red. And this is before any new TIF agreements that might have been made since this data was all prepared and published in June 2009. As a best-case scenario based on this data, the City would expect another net gain of $77 million, and would not commit any new costs, and the fund would find itself about $22 million ahead at the end of 2009.

When Alderman Thomas Allen asked the simple question about plugging the budget gap using TIF funds,
he was told that "it can't be done."
ALLEN: Why can't we take resources that are in the TIF districts, income, and use it to plug this hole. Why do we give this money to private developers? Let's give it to the citizens. That can't be done, according to a city spokeswoman. She says state law does not permit Chicago to spend TIF money on general expenses.
After Mayor Daley spoke about the budget on October 21st,
Progress Illinois had a simple question for him.

Listening to his speech, you'd never know that the TIF network is the single largest tool that the city has at its disposal to balance the budget and jumpstart the local economy.

So why the silence?

Indeed, Anna Tarkov
quipped, "The silence from the 5th floor is deafening."

With a $500 million shortfall in the general budget, and a supposed billion dollar slush fund apparently running another $55 million in the red, it's no wonder you can hear a pin drop.

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