Rahm’s slush fund has money for our schools

October 6, 2016

Chicago can afford to pay its teachers--in fact, Mayor Rahm Emanuel has a "slush fund" worth hundreds of millions of dollars that could do just that, explains Nicole Colson.

"WE DON'T have the money": That's been the sad refrain of Chicago Mayor Rahm Emanuel and Chicago Public Schools (CPS) officials like CPS CEO Forrest Claypool as the 28,000-strong Chicago Teachers Union (CTU) prepares for another citywide strike set for October 11 after working for 15 months without a contract.

Emanuel and his boys say there's nothing left in the city's piggy bank to avoid drastic pension and health care cuts for teachers--or to prevent the budget cuts that have caused schools across the city to lay off more than 1,000 teachers and staff over the past few months.

But it's a publicly verifiable fact that Emanuel controls hundreds of millions of dollars squirreled away in his own private slush fund--more than enough to meet the demands of teachers.

THE OFFICIAL name for this pot of money is the tax-increment financing (TIF) program. In each of Chicago's 50 wards, a portion of the revenue from property taxes is diverted into what amounts to a series of local piggy banks for 148 TIF districts set up by the City Council, usually at the behest of the mayor.

Chicago Mayor Rahm Emanuel speaks to the press flanked by CPS CEO Forrest Claypool
Chicago Mayor Rahm Emanuel speaks to the press flanked by CPS CEO Forrest Claypool

At the start of 2015, these funds totaled an incredible $1.44 billion--this is in a city where the mayor cries poverty to justify cuts not only in education, but all kinds of services.

When the city creates a TIF district, the amount of property tax dollars spent on services in the area is typically "frozen" for 23 years--and any extra tax revenue generated above that amount lands in the TIF account. In theory, TIF money is set aside for construction and development projects meant to improve "blighted" areas by attracting investment and jobs in the long run.

But the way TIF money is parceled out (or not) lacks virtually any public oversight. It often seems to boil down to political leaders in the city--especially the mayor--showering tens of millions of tax dollars on their own pet projects, or those of their rich associates.

Recipients of TIF handouts over the past several years include Vienna Beef ($5 million in TIF funds), Coca Cola ($3.2 million in TIF funds), the Willis (Sears) Tower ($4 million in TIF funds) and United Airlines ($35 million in TIF money).

But wait, there's more. Under an unclear process, the city can transfer money from one local TIF district fund to another--meaning that residents of poorer South Side neighborhoods have had millions of dollars of their property tax revenue shifted out of their TIF districts, to be used to fund projects on the wealthier North Side.

And many of the projects that do get funded in needier neighborhoods end up serving the needs of gentrifiers, not the people who already live there. Case in point; a recent $15.9 million TIF subsidy to build luxury condos in the North Side's Uptown neighborhood.

"[O]ne of the TIF program's greatest flaws is that the lion's share of money supposedly intended for the poorest of the poor goes to the richest of the rich, making it a classic case of reverse Robin Hood on steroids," explained the Chicago Reader's Ben Joravsky in 2011.

AN ORDINANCE is currently languishing in the City Council that would mandate that a proportion of surplus TIF money goes to the Chicago Public Schools in years when CPS is declared to be in "distress."

It seems like a no-brainer--after all, funding schools is one of the primary things that most residents think their property taxes should go toward.

The Chicago Teachers Union says that if the city declared a $205 million TIF surplus by December 2016, CPS would receive an estimated $150 million--which would go a long way toward covering the shortfall the city claims is the reason for attacking teachers' pensions and benefits.

And there's already a precedent--in 2015, the city declared a surplus of $113 million in TIF funds and redistributed it, with about half going to CPS.

"The Cook County Clerk's office recently reported nearly $500 million in tax receipts sitting in TIF accounts,"according to a CTU statement. "The cut in teacher salary amounts to just $200 million. By emptying TIF surpluses across the city, not only can CPS avoid cutting teachers, but the draconian cuts imposed this summer also can be reversed."

Yet despite the severity of the crisis, several aldermen have expressed reluctance over the proposed TIF surplus ordinance--because it would threaten their own pet projects. Some 39 of Chicago's 50 aldermen have signed onto the ordinance, but many of the supporters quietly say they don't want the surplus funds coming out of their own wards.

Among those refusing to support the ordinance is the supposedly "progressive" Alderman Joe Moore, who dismissed the TIF proposal as a "quick-fix solution to play to the crowd."

However quick the fix may be, Moore doesn't explain what's wrong with it--why shouldn't property taxes be used for the operation of the neighborhood schools they were intended for.

Instead, Moore is offering advice about how to turn public opinion against the teachers. He urged the mayor to "make the best possible offer" and "sell it" to parents who are upset about the thought of a possible strike. "If teachers reject something viewed as reasonable, ultimately the public will turn against them," Moore pronounced, sounding for all the world like one of the hedge-fund parasites who wants Emanuel to bust the CTU.

FORTUNATELY, TEACHERS aren't buying a line from Moore any more than from Emanuel--and they have support from students, parents and community members.

As Erica Clark of Parents 4 Teachers told the media at an October 4 press conference organized by the Chicago Teachers Solidarity Campaign:

This bill is not a one-time stop-gap. In any year that CPS is in financial straits...that TIF surplus would come back to CPS automatically. And the money that the city would get from the TIF surplus would also come back to CPS...Why is it being blocked in the finance committee? We were at two hearings--two hearings!--where they blocked it.

"Rahm Emanuel knows that we have money," explained activist Leticia Barrera of the Logan Square Neighborhood Association as she waited for the October 4 press conference to begin. "He literally has the solution in his hands with the TIF money."

Logan Square is a neighborhood that is being gentrified quickly--and where former Alderman Rey Colón helped shepherd millions of TIF dollars to wealthy developers building luxury units that are driving up rents in a once-working-class area.

Barrera, who has a son in fifth grade at James Monroe Elementary School, added:

Why not, instead of putting money into making deals with aldermen to continue building condominiums--which are very expensive, let me tell you--direct the money to our schools, because it can alleviate the crisis? Forty, forty-five students in a classroom--this is not right. [Mayor Emanuel] is exterminating the public education system in Chicago.

One of the critical obstacles to moving the TIF ordinance forward has been Alderman Ed Burke, chair of the Finance Committee and a close political ally of Mayor Emanuel. Burke presided over Finance Committee meetings where discussion of the proposed TIF ordinance was shut down while frustrated parents waited to have their voices heard.

"We want a vote! Keep our schools afloat!" chanted parents at one September meeting as they were led from the room by police.

As Erica Clark said:

If the mayor wanted to put more money into the schools, if he wanted to avoid a strike, he could do it tomorrow. He has to tell his friends on the City Council to pass the TIF bill, and he could reinstate the corporate head tax [a tax Emanuel pushed to eliminate in 2011, under which companies with more than 50 employees are charged $4 per employee per month]. That's $250 million easily right there that could be given back to the schools if he wanted to.

"He keeps saying this is a strike of choice," Clark said. "It is--and it's his choice."

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