The over 400 Tax Increment Financing (TIF) districts in Cook County now take 8. 29% of all property taxes.   See where these TIF districts are on the Cook County TIF Map. TIFs collected $892 Million for the 2007 tax year.  TIF revenue is growing fast and is up 11.5% from the prior year. The TIF Act was intended to finance the alleviation of blight. Instead TIFs are being abused for all kinds of pork barrel projects and subsidies to corporations and developers. In the vast majority of TIFs,  taxpayers get no referendum, no representation, and no benefit.   Not one dime of TIF tax appears on any property tax bill. Read Ben Jaworski’s  Series of articles in the Chicago Reader on TIF abuses. Some eye-opening reports are  available on  David Orr’s Cook County Clerk TIF Reports website.

Closer to home, the Village of Schaumburg is proposing a Star Line TIF with an estimate of $120,000,000 in property tax increases. $95,000,000 of that is a subsidy for developers to build a glut of condos, office buildings, restaurants, and hotels and $25,000,000 for an expressway ramp at Meacham. When a TIF is enacted, any property tax increases due to assessment increases in the TIF district go to the TIF for 23 years.  That means all other taxing bodies will be frozen at the 2009 assessed valuation for 23 years for any property in the TIF district.

TIF loss of tax base

A TIF causes your property taxes to increase. District 54, for example, would lose $44,000,000 over 23 years due to the Star TIF, if tax rates stay the same. Will District 54 spend $44,000,000 less to prevent a tax hike? That is extremely unlikely. To keep up with inflation, it is highly likely they will keep on spending as if the TIF never existed. The tax increase will be caused by the TIF, but the actual tax increase will be borne by all other taxing bodies as they compensate for a partially frozen tax base. That is also why the tax is borne by all taxpayers in all taxing bodies that overlay the TIF, not just the taxpayers in the TIF area. It is why a TIF is taxation without representation.

The following graph shows an estimate of how a typical home inside the TIF district experiences a tax shift from schools and other taxing bodies  to the TIF (green bar) using a very conservative estimate of assessments doubling in 23 years. By then, half of the tax revenue from inside the TIF will be diverted from schools and other taxing bodies to the TIF. Outside (and inside) the TIF, the chart also illustrates how a tax increase will occur in every other taxing body to make up for lost Star TIF tax base and revenue. The Star TIF represents 1.5% of District 54. After 23 years, the revenue loss and tax increase for District 54 due to the TIF will reach  0.75% assuming spending keeps pace with inflation and all other factors are kept equal. Because other taxing bodies are large compared to the Star TIF, the Star TIF tax effect will be diluted, especially on county-wide taxing bodies. But because there are over 400 TIFs, the net TIF tax increase is currently 8.29%  on average. What are you getting for all these TIFs?

TIF tax increase

Another way to recognize that a TIF causes taxes to rise is spending. The Star TIF is $120,000,000 of completely new spending that will not occur if the TIF is not enacted. Despite Village of Schaumburg claims that a TIF is not a tax increase, the $120,000,000 in new spending must come from either $120,000,000 in new tax revenue or $120,000,000 in cuts someplace else. A TIF is not a magic wand to make revenue out of nowhere, as the Village of Schaumburg wants you to believe.

Schaumburg has one other TIF:  the Olde Schaumburg TIF downtown. Listen carefully when Village officials claim they do not “levy” a property tax. That does not mean they don’t “collect” a property tax. To levy means to ask the county for a set amount of property tax that will show up on your tax bill and it is not the only way to collect property tax. Schaumburg collected $2.5 million for 2007 just for the Olde Schaumburg TIF as shown in this report. Currently 78% of property tax in the TIF district goes to the TIF,  even though tax bills in the TIF area say zero dollars go to the TIF and 100% go to the schools and other taxing bodies.

The Village of Schaumburg claims in the Star Line Plan that “a TIF does not increase taxes”. This is utter nonsense. This is equivalent to saying that even though you are freezing the tax base for schools and other taxing bodies for 23 years, none of them will raise taxes to compensate. It would be impossible for the TIF to get any money at all without an increase in the property tax. It’s right in the name – Tax Increment. If there is no Tax Increment, there is no point in having a TIF.    The normal property tax increases due to assessments in the TIF district for the next 23 years will go to the TIF instead of all the schools and other taxing bodies. The TIF changes who gets the tax increase. Either way it is still a tax increase in the context of  your entire tax bill.

The Village loves to advertise that the Village does not “levy” a property tax. They should also advertise the property tax they collect along with that. For a TIF, a levy is irrelevant and misleading. A TIF does not use a levy. It doesn’t need to. With a TIF, the Village gets to siphon off parts of everyone else’s levy without telling the taxpayer how much. That is why TIFs cause your tax bill to misrepresents where your tax dollars go. The Village seems to favor the fact that they can collect property taxes without it showing up on the tax bill under the Village of Schaumburg name. That way, the other taxing bodies get the blame for raising taxes caused by the TIF.

Your tax bill uses the standard formula of assessed valuation times the sum of all the tax rates on your bill. $100,000 of EAV X $1.00/per $100 of EAV = 1% or a $1000 tax bill. The County Clerk takes TIF funds out of taxes on properties in the TIF district for the TIF before it cuts checks to each taxing body. If after 10 years, that same $100,000 house is now $150,000, then a 1% tax is $1,500, of which $500 goes to the TIF and the other taxing bodies are still getting the frozen $1000 they got 10 years ago. The tax bill will say $1500 went to the schools and other taxing bodies, but only $1000 of it really did. That is why a TIF is a dishonest, unfair method of taxation.

Anything that freezes any part of the tax base for 23 years is bad for schools. Due to the government-fueled real estate boom and  bust, the tax base is likely to shrink, putting on pressure to raise the tax rates for any taxing bodies dependent on property tax. The Star Line TIF will eventually freeze at least another $120,000,000 of tax base, which will hurt the tax base even further. In my opinion, the Star Line TIF will cost several times the estimate of $120,000,000, if enacted. View Star Line budget article. The existing Olde Schaumburg TIF is currently 681% higher than the original estimate so Schaumburg has a bad track record. This is not the time to freeze the tax base and raise taxes. There is never a good time to give $95 million in frivolous handouts from taxpayers to real estate developers. Call your trustee and tell them NO on the Star Line TIF.

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