The $19.1 Billion Question: Where is Chicago’s Money?

On Saturday, March 25, an energetic crowd of more than 50 ward residents gathered at the Reilly School to challenge the notion that our city is broke and drastic budget cuts are necessary. Guest speakers included Tax Increment Financing (TIF) expert Tom Tresser and urban affairs consultant/community organizer Amara Enyia, co-authors of Chicago is Not Broke: Funding the City We Deserve. Their book, which was distributed to Chicago’s 50 alderman and Mayor Rahm Emanuel, examines the cost of corruption, toxic bank deals, and police abuse; discusses hidden money in the form of TIFs; and offers solutions to generate revenue through a progressive income tax, a financial transaction tax, and a public bank.

UNDERSTANDING THE CITY’S BUDGET

Thirty-Fifth Ward Alderman Carlos Ramirez Rosa described that each year, the City Council determined the budget through closed-door gatherings between groups of 11 to 12 aldermen, the city’s chief financial officer and the budget director. At these gatherings, the aldermen were asked to make decisions on what areas of the budget they thought they should cut and where they thought they can generate revenue.

“Government is about making decisions about representing interests. And my experience in the Chicago City Council has been that consistently it’s the interests of the rich and powerful that account for us,” said Ramirez Rosa. “We have to think differently. We have to have a conversation about how we can create progressive revenue, how we can tax the rich and powerful so that they pay their fair share.”

When civic educator Tom Tresser began researching Chicago’s budget as part of the TIF Illumination Project, he found that navigating the data was not an easy process. The City’s budget is presented in a series of different documents, available on the website of the City’s Office of Management and Budget, and information on TIF funds and special service areas are not included.

Tresser described a budget as an aspirational and moral document. “What kind of city do we want to be in two years, five years?” Tresser said. “A budget is a roadmap of the future, and it is also a scorecard. Who’s winning and who is losing? Who’s getting and who’s gotten? We are being gotten.”

CALCULATING THE COST OF STOLEN MONEY

The annual budget of the city is $19.1 billion, which covers the City of Chicago, Chicago Public Schools, Chicago Park District, Chicago Housing Authority, Chicago Transit Authority, City Colleges, TIF districts, and special service areas.

However, corruption resulting from no-show employees, fraudulent government contracts, lawsuits for damages, and embezzlement of funds, costs Chicago approximately $500 million each year.

And rather than generate revenue through progressive solutions, the city struck deals, labeled by Tresser and the authors as toxic swaps, with big banks, resulting in $2.3 billion in fees. Tresser estimates that the city could lose another $1 billion in interest fees.

Then there’s the cost of legal fees for the Chicago Police Department from police abuse cases, which have amounted to $622 million since 2004.

“All that needs to be thoroughly investigated and put on a website,” said Tresser, calling for transparency.

THE MAYOR’S SLUSH FUND

Chicago’s TIF fund was created in 1986 by Mayor Harold Washington to promote public and private investment around the city. TIFs, which are generated through property tax, are supposed to be used to build and repair infrastructure in each district, and fund development projects on vacant properties. However, CivicLab reports that a study conducted by the now-defunct Chicago News Co-op found that between 2002 to 2010, half of TIF funds were distributed to private companies like Coca-Cola and the Willis Tower.

At the start of 2015, there was $1.4 billion dollars available in TIF funds. As of 2016, information on TIF expenditures was not available on the city’s website.

“It’s become a slush fund,” said Tresser. “The mayor proved that himself when he came out with $8 million to appease the CTU during their strike.”

GENERATING FUNDING THROUGH PROGRESSIVE REVENUE

The final part of Chicago is Not Broke focuses on progressive ways the city can be generating revenue. A progressive income tax could generate $85 million in revenue, and a financial transaction tax on LaSalle Street could bring in about $2.6 billion.

Co-author Amara Enyia, of ACE Municipal Partners, discussed the implications of creating a public bank.

“In 15 cities across the country, in different states, across the east coast in Pittsburgh and Philadelphia, this is a viable proposal and they’re moving forward,” said Enyia. “Chicago, as a big city, should really be at the forefront of leading the charge to create a public bank.”

A public bank would make a difference by providing low interest financing for infrastructure improvements, increase access to capital for small businesses through the additional capacity to issue small business loans, access to student loans for Chicago students, and an increase in capital for affordable housing.

Enyia estimates that a public bank for Chicago would reduce public debt and result in $1.365 billion in revenue.

“This book gives us the language to advocate for ourselves,” said Enyia. “It’s not enough for us to simply point out issues and to complain about them. We have to be vocally aggressive about putting forth proposals that address those issues, that reflect the values that we have and that we hold as taxpayers in this city.”

Visit WeAreNotBroke.org to purchase Chicago is Not Broke and to learn more about bringing the authors to your community or classroom.