After months of harshly criticizing Gov. JB Pritzker and state lawmakers for refusing to bail out Chicago Public Schools, an increasingly desperate Chicago Teachers Union now says the money to hire more union members and give existing workers a substantial raise has been here in Chicago all along.
CTU now is calling for tapping all the excess funds in the city’s tax increment financing districts for CPS. The union says that would provide funds to close the existing budget deficit, which is estimated at around $700 million next year, and, whaddya know, pay for a pricey new CTU contract.
Who knew?
Trouble is, the CTU’s latest money-grabbing prescription would afflict the city for decades to come.
TIFs are complicated. Leftists like the people now running CTU long have criticized them as mayoral and aldermanic piggy banks, tapped to reward deep-pocketed developer friends who don’t need the money.
And, to be honest, past mayors and aldermen at times have indeed made choices that could be criticized along those lines.
But tax increment financing is a tool that, when used properly, helps finance needed public-improvement projects that otherwise wouldn’t happen, or at the very least would be far more difficult to realize. These include improvements to the very school buildings in which CTU members work, important road projects and affordable housing additions.
Many such projects contribute to economic growth, both in the immediate creation of construction jobs and in the longer-term role as catalysts for population growth (something Chicago desperately needs) and development infrastructure.
In short, TIFs are indispensable. There are no substitutes for them presently, particularly in a city that continues to be plagued by structural deficits. To essentially eliminate them as a future development tool in order to pump hundreds of millions more into a bloated school district would be recklessly counterproductive.
So how do TIFs work? Municipalities establish special districts in which current property values are frozen and the taxes levied on incremental additions in property value then are socked away for future projects approved by the city. These districts last for more than two decades and after they expire, the (hopefully greater) property tax revenues generated within their borders then flow back to taxing bodies like the city of Chicago and Chicago Public Schools.
The proliferation of TIF districts under past mayors has meant that there’s a considerable cash surplus in the aggregate coming from revenue that has not yet been allocated to specific projects. Mayors routinely tap those surpluses to balance their budgets; last year, Johnson swept up $434 million from TIF surpluses, a record one-year amount. That helped balance his first budget as mayor, but it helped the CPS budget even more. The schools, which consume more than half of what Chicagoans pay in property taxes, got more than $220 million of Johnson’s grab.
Now, CTU wants to go bigger — far bigger — and simply drain the rest of Chicago’s TIF accounts not already committed to existing projects. The union claims the schools would get a one-time fiscal shot of more than $1 billion this way and, once the TIFs were dead, then get more than $380 million annually after that.
That would be reckless. Unfortunately, others whom we expect to be more rational than CTU leaders are sounding similar notes. CPS CEO Pedro Martinez — yes, the man CTU and Johnson have been maneuvering to remove from his post — also views TIF surpluses as a potential part of solving the district’s fiscal woes, at least in the short term. Reportedly, Martinez has urged Johnson for many months now to tap TIF cash for the schools rather than adding hundreds of millions more in high-cost debt to cover pay raises for teachers and a $175 million pension payment the mayor would prefer not to handle in the city government’s budget.
Martinez wouldn’t kill the TIF accounts completely, as CTU would. But he would leave them badly depleted.
Johnson has his own nearly $1 billion city budget deficit to plug, so a TIF sweep of some sort no doubt will be involved when he unveils his budget at the end of the month. But leaning too heavily on TIF for one-year budget Band-Aids will kneecap a tool Johnson (and future mayors) need to help the city’s economy. It’s also an inappropriate prioritizing of CPS above all the city’s many other needs.
Neither CTU nor Martinez are acknowledging the obvious need for rightsizing a school system that has seen its budget increase 30% since 2019 while enrollment has fallen about 10% during that time frame. A serious governmental response would couple minimally needed revenue to get through the immediate budget crisis with demands for a plan in the near future to address the bloat. Johnson, CTU President Stacy Davis Gates and even Martinez won’t admit these unsustainable budget trends are an issue.
The politics of Chicago schools, now that CTU has one of its own ensconced on the fifth floor, has gotten so shrill and aggressive that sometimes it’s difficult to remember how school systems throughout the rest of Illinois handle structural budget imbalances. Generally, they compare enrollment trends with the costs of their buildings and personnel and they make tough decisions on how to match those resources to the number of students they serve. Look no further than the school district serving Evanston and Skokie — neither bastions of conservatism nor enemies of organized labor — to see that dynamic at work right now.
We don’t mean to make these deliberations sound easy. The reality in most of these school debates is quite the opposite.
But young children are supposed to be the ones who stamp their feet and yell and scream in order to get their way. Grown-ups are expected to make decisions based on the realistic options before them.
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