What Are TIFs and Why Is the Teachers Union Wrong About Them?

There were two very important events in Chicago yesterday. One serves as an example of what SHOULD be happening more in Chicago with TIF funds. The other presents a terrible idea and embodies exactly what SHOULD NOT happen with these dedicated funds.

Early yesterday morning there was jubilation on the south side as a Whole Foods store opened in the predominantly Black, Englewood community. In the late afternoon, Black parents and children stood outside a union hall in a cold rain praying that God would change the minds of the 800 Chicago Teachers Union delegates who announced that they will walk out on Chicago’s children if the Chicago Public Schools does not capitulate to their demands.

Now that the bottomless pit we know as the Chicago Public School’s pension obligation has sucked up millions from the state coffers after the legislature and governor came to a temporary truce on the budget stalemate; and after that same bottomless pit has sucked millions out of the pockets of taxpayers (like me) with a brand new property tax increase for schools, CTU leadership has set their sites on coveted TIFs (Tax Increment Finances).

So what is a TIF?

Tax increment financing (TIF) is a public financing method that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects. Through the use of TIF, the city diverts future property tax revenue increases from a defined area or district toward economic development or public improvement projects in the community. It is not uncommon to transfer dollars from one TIF to another in order to fund large projects that improve the entire city.

TIF dollars made it possible to do the project in Englewood. Along with a Starbucks and other shops that will come to the complex, there is tremendous hope that this development will serve as an engine for economic redevelopment for the 63/Halsted corridor, one of the the most significant areas of yesterday’s Black Chicago. According to community leaders who have been involved with the project from the beginning, somewhere in the neighborhood of $10 million in TIF funds were involved with the overall financing of the project.

The Whole Foods Market in Englewood represents the kind of “economic development” and “public improvement” that TIFs were designed to foster.

Across town, the Chicago Teachers Union put forward the idea that a raid of TIF funds is an easy solution to the contract negations between the union and the Chicago Public Schools. They informed the entire city (including about four dozen parents who stood outside in the rain) that they will walk out of the classroom if CPS does not meet their demands for more money before October 11th.

Now, the City of Chicago has used TIF to supplement school funding. Using TIF dollars is a legal way to get even more money into schools than would otherwise go to schools from the maximum property tax levy. (Here’s a pretty complicated explanation if you’re into that sort of thing.) But, this is a diversion from the general use of TIF dollars. The city is supposed to use these dollars “to build and repair roads and infrastructure, clean polluted land and put vacant properties back to productive use, usually in conjunction with private development projects”. TIF is not a school funding program.

CPS teachers already make more than other teachers around the country, more than other people in the city and A LOT more than most of the families they serve. It is not a good idea to use money that should be creating more Whole Foods Market type projects in the most underserved neighborhoods in Chicago and direct it to increase the pay level of the most generous teacher contracts in America.

The TIF funds that were used to help make Whole Foods Market in Englewood possible will spawn economic development on the south side, not to make the already generous salaries of the Chicago Teachers Union a little more comfortable. That’s the way it should be.

Use TIFs to create jobs for parents, not to inflate pay for teachers.

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Chris Butler is first a husband and a dad. He has been involved across the spectrum of public engagement activities and has worked with a number of diverse constituencies in urban and suburban communities. He has also been involved in several political campaigns including his service as a youth and young adult coordinator for Barack Obama’s primary bid for U.S. Senate. Chris worked as deputy campaign manager and field director for A+ Illinois where he developed a strong, statewide field operation including over 500 organizations and 50,000 individuals around the state working to bring adequacy and equity to Illinois’ school funding system and as the director of advocacy and outreach at New Schools for Chicago, a leader in school reform in Chicago. Chris is a 2006 graduate of the Ministry Training Institute and holds a degree in civic and political engagement from Northeastern Illinois University.

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