November 23, 2010
A new report on Cook County Tax Increment Financing (TIF) districts was released today by Cook County Clerk David Orr. For tax year 2009 (taxes paid in 2010), revenue for Chicago TIFs totals $519.7 million.
Is that $519.7 million paid by people who own property in TIF districs?
Technically yes, because if those taxpayers are late or delinquent in their payments, the TIF districts do not receive their revenues on time. But, in a very real sense, all Chicago property taxpayers and even owners of property outside Chicago pay that $519.7 million. TIF districts limit the equalized assessed value (EAV) available to other taxing districts, thus making tax rates higher than they would have been otherwise. The result is that taxpayers in non-TIF district portions of a municipality or even in other municipalities pay for the TIFs of municipalities with shared taxing agencies (such as the Metropolitan Water Reclamation District, Cook County and Forest Preserve District of Cook County). Consequently, tax rates are higher than they would be otherwise. Residents of Berwyn are effectively subsidizing the TIFs in the City of Chicago and vice versa because the taxpayers in both municipalities experience higher tax rates for shared governments. For a fuller explanation of how this works see page 38 of the Civic Federation’s tax extension report.
Is the $519.7 million sacrificed by school districts, park districts and other taxing bodies?
No. In Cook County tax caps (Property Tax Extension Limitation Law, or PTELL) now effectively limit the tax revenues of almost all non-home rule taxing bodies. The Civic Federation’s tax extension report explains this on page 30. The schools, parks, sanitary districts and forest preserves all still receive the full amount of property tax revenue to which they are entitled by the property tax statutes, just with a slightly higher tax rate. In fact, Chicago taxing districts will receive extra revenue from TIF next year due to the City of Chicago’s declaration of a “TIF surplus.” This is property tax revenue that the taxing districts could not have received under the tax cap law, but they are allowed to receive above and beyond tax caps since the revenue was already collected from taxpayers through TIF. See this blog post for more on how TIF does—and doesn’t—affect tax revenues of local governments.
The Civic Federation and Clerk Orr both continue to call for greater transparency in the use of TIF revenue by municipalities.