Lightfoot declares $300 million TIF surplus — largest in Chicago history
The record surplus will funnel $163 million to the Chicago Public Schools. But that will be enough to bankroll only the five-year, $500 million offer the Chicago Teachers Union has rejected.
Mayor Lori Lightfoot’s 2020 budget includes a $300 million tax increment financing surplus — the largest in Chicago history — just to help bankroll the $500 million offer the striking Chicago Teachers Union has already rejected, a top mayoral aide said Wednesday.
By closing out five TIFs and scouring all of the others, Lightfoot has managed to generate $163 million for Chicago Public Schools. That’s $66 million more than the school system received last year.
The city will get $31 million of that money to help defray its $838 million budget gap.
TIFs allow the city to generate money for economic development in a specific geographic area. That’s done by reinvesting all new property tax dollars in the neighborhood from which they came for two decades or so.
But oftentimes the money sits unused, and Lightfoot is tapping it to help with the financial challenges both CPS and City Hall are facing.
A top mayoral aide acknowledged the TIF surplus is the largest in Chicago history. It’s $125 million more than last year.
But the aide stressed the windfall for CPS is enough to cover only the five-year, $500 million mayoral offer that CTU already has rejected. That offer includes a 16% pay raise over five years and increases in school support staff.
“This is, in essence, scraping the mayonnaise jar. We went through and aggressively surplussed every single TIF. … The [extra] $66 [million] covers the offer that’s currently on the table,” the mayoral aide said.
The administration effectively took out all the extra money that wasn’t already committed for projects in various neighborhoods.
“We scrutinized every project — took a look at what the tax forecasting would be based on projections for what property tax values would be in each of the TIFs. And we’ve more aggressively surplussed in order to be able to get more bodies back to the taxing bodies, in particular CPS because … they are facing increased costs as related to this contract.”
During the public comment section that precedes every City Council meeting, one man on Wednesday demanded Lightfoot cancel her “overly generous” offer to the teachers union.
The remark was greeted by an audible groan from the audience and several aldermen who are allies of the Chicago Teachers Union.
Lightfoot was paying rapt attention, as she always does does during the public comment section. But she didn’t say a word.
Yet another speaker yielded his time to a Brighton Park High School student, who read a letter from a 5-year-old.
In the letter, the student pleaded with the mayor to bring the strike to an end.
Former Mayor Rahm Emanuel endured a seven-day teachers strike in 2012 and used an $87.5 million TIF surplus to stave off a second teachers strike. His own City Council floor leader acknowledged the surplus was one-time revenue that could not be sustained.
On Wednesday, the Lightfoot aide acknowledged the same thing under questioning by the Sun-Times.
“You make a good point. This surplus is one-time revenue. And importantly for CPS, they’re gonna need to find additional revenues going forward,” the mayoral aide said.
“The total cost of the contract that’s on the table right now over a five-year period is gonna cost somewhere around $500 million. This $66 million [increase] only gets us a very small [part] of the way towards that $500 [million]. From a financial policy perspective, it does buy … CPS some additional runway in order to find alternative revenue sources — long-term, structural revenue sources — to be able to fund the remainder of the contract in future years.”
And what might those “long-term structural revenue sources” be?
“There’s annual property tax increases that CPS had employed. Some of that has already been baked into their obvious forecasting,” the top mayoral aide said.
“[But] it’s not like the city where they’re a home-rule entity. They’re capped.”
Might Lightfoot ask the Illinois General Assembly to lift the cap, paving the way for CPS to impose a higher property tax increase?
“We have not had any of those discussions as it relates to CPS. Really at this point, it’s so early on in the process. This is the first [go around at] figuring out what our internal resources that they can apply” might be, the Lightfoot aide said.
For years, the CTU and its City Council allies have pointed to TIFs as if they were a pot of gold to fund the school system’s needs and the union’s demands.
The purpose of the Lightfoot administration’s conference call with reporters preceding the mayor’s budget address was apparently to disabuse the union of that notion and nip that talk in the bud.
Another top mayoral adviser said the city and school district’s steadfast position that a new CTU contract needs to run five years has to do with giving officials more time to find long-term budgeting solutions.
“This is a really expensive contract. Having a five-year deal gives us way more flexibility and runway to figure out how to pay for all this stuff,” the adviser said.
“We are projecting significant deficits in the out years, even with the offer that we have on the table. We’re going to have to figure out how to close them, just like the city had to figure out how to close its own deficits.”
Contributing: Nader Issa