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Daley: TIF Money Could Be Used To Fill Chicago Budget Gap

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It has been investigated by some of Chicago's most dedicated journalists. It has been the subject of heated criticism, public debate and sunshine legislation.

But ultimately, the city's so-called "shadow budget" could be slashed not by public outcry, but by Chicago's budget shortfall.

Reports over the weekend suggest that Mayor Daley might consider using some of the $1.2 billion held in the city's tax-increment financing (TIF) accounts to help close the estimated $655 million deficit the city will face in the coming year.

TIFs are funds in which property taxes are set aside for development projects. The funds are at the discretion of the mayor, and he has long cherished his use of TIF money. Returning TIF dollars to the city has been entirely off the table for many years.

At this point, though, the city has few places to go for additional revenue to fill the hole in the budget.

The one option Daley patently refuses to consider is raising taxes and fees. He also said he doesn't want to "throw everything on (the) back" of organized labor by demanding the type of concessions from unions he sought last year, as the Chicago Tribune reports.

Another option that came up was further privatization of city services, especially Midway Airport. This has been a favorite vehicle of generating revenue throughout the mayor's administration. But again, Daley was reluctant, citing the poor market and expressing concern that the city would get a poor deal. The Sun-Times described his reaction to the idea as "lukewarm."

The funds from his two major privatization deals -- the city's parking meters and the Chicago Skyway -- were expected to last 75 and 99 years, respectively. But they have both been raided so often that, just a few years in, there will be only around $800 million left by the end of 2010. The funds originally held roughly $3 billion.

With little left in the privatization kitty, and few other sources of revenue available, Daley has for the first time openly mulled the possibility of dipping into TIF dollars. There is currently a total of $1.2 billion in the city's TIF accounts.

But it's not as simple as writing a check from a TIF account to the city. Because TIF money was taken from property taxes, it would have to be redistributed to all the city's taxing agencies. Chicago Public Schools would get a big slice of the pie; the city's general fund would only receive about 20 percent.

That means that if the entirety of the $700 million of still-unallocated TIF funds were liquidated, the city would only end up with around $140 million.

The mayor was cool to the idea of cashing out his favorite development tool for this small, temporary payoff, according to the Sun-Times:

"The economy is getting worse every day," the mayor said Saturday, "again, you have to look at the long term, what do we use TIFs for? Building new schools, for parks, for employment in communities; we use TIF money for training people, for ex-offenders -- how can they get a job if they don't have any training. You have to set your priorities and we have to talk about it. It isn't one over the other, these are all priorities in the city."

But with few other palatable options available, the end of TIFs is on the table for the first time.