NEWS

________________________________________________________________________________________
FROM THE OFFICE OF STATE REPRESENTATIVE JOHN FRITCHEY
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION
August 22, 2010 Dave Kornecki
312-498-7089

Major TIF Overhaul Proposed to Fund Schools, City

Proposals Would Mean Hundreds of Millions of Dollars for
Everything From Classrooms to More Police Officers
CHICAGO – State Representative John Fritchey (D-Chicago) was joined today by Chicago
Teachers Union President Karen Lewis, a representative from the Raise Your Hand coalition,
and Chicago Public School high school students, to propose sweeping reforms to laws governing
the tax increment financing (TIF) districts that have long been used as a development tool by the
City. The proposals, if passed into law, would result in hundreds of millions of tax dollars being
returned to both the Chicago Public Schools and the City of Chicago, as well as greater
accountability for the City’s 150+ TIF districts.

Rep. Fritchey stated that the pieces of legislation are needed and are the most obvious ways to
get both the City and the schools back on their feet during the economic crises faced by both
entities. “This is not the time for finger pointing or excuses; it is the time for solutions,” stated
Rep. Fritchey. “While our schools are stretched thin and our police force is undermanned, there
are hundreds of millions of already-collected tax dollars sitting idle. That has to change and has
to change now.”

The three pieces of legislation being introduced by Rep. Fritchey are as follows:

1. Required Annual Reimbursement of Surplus TIF Funds

A recent audit of City finances performed by Deloitte & Touche found that at the end of 2009,
Chicago’s 159 TIF districts had a combined balance of $1.2 billion dollars. Out of that amount,
only $37.1 million dollars was reserved, leaving over one billion dollars in unspent reserves.
While the City has long acknowledged having surplus TIF funds, city officials have never
chosen to return those funds as other communities, such as Oak Forest and Chicago Heights,
have done.

To address this issue, Rep. Fritchey is introducing legislation that would require, (instead of just
permitting as the current law does), that all TIF funds not specifically appropriated for projects
be returned each year so that they may be redirected to the taxing bodies on a pro rata basis.
Using the present figures, Fritchey’s initiative if passed into law, would have resulted in $535
Rep. Fritchey Press Release
TIF Reform Package
August 22, 2010
Page -2-

million dollars being returned to the Board of Education this year, more than enough to
completely eliminate the Chicago Public Schools’ $370 million dollar budget deficit. It would
have also resulted in approximately $200 million dollars being redirected to the City’s own
budget, money that Fritchey said could be used for everything from hiring additional police
officers to restoring scaled-back city services. Fritchey added that his proposal would also put
approximately $90 million dollars into Cook County’s cash-strapped coffers.

“In these troubling times when families are struggling just to make ends meet, there is no
defensible rhyme or reason behind holding onto a billion dollars of taxpayer money while
schools are being forced to do without necessary resources and our police force is short
hundreds, if not thousands, of officers,” said Rep. Fritchey. “Keep in mind that I am not talking
about new taxes, these are tax dollars that have already been taken out of residents’ wallets and
should be put to their intended use.”

The proposal received enthusiastic support from Chicago Teachers’ Union President Karen
Lewis, who heralded the concept during her recent election. "Chicago students' academic futures
are being held hostage,” said Ms. Lewis. “Since city officials have not yet heeded citizens'
outcry to return TIF dollars to the Chicago schools, we urge state officials to follow Rep.
Fritchey's lead and intervene."

Fritchey stated that it is worth noting that each year, the TIF districts collect approximately $500
million in new tax revenues, thereby replenishing the TIF funds in order to provide for any future
development projects. “This proposal does not take away one dollar that has been earmarked for
a specific project, and it doesn’t impact the City’s ability to use TIF funds to spur development,”
said Fritchey. “Since the City doesn’t even spend all of the TIF dollars it presently takes in, I
don’t see how or why they would object to putting the unspent money back to its intended use.”

2. Exemption of Board of Education From any Future TIF Districts

TIF districts are funded by diverting collected property tax dollars away from the various
districts on a pro rata basis. Since the Board of Education accounts for 53.5% of collected
revenues, diverted education dollars account for just over one-half of all TIF funding. While it is
not possible to change the funding structure for existing TIFs, Rep. Fritchey is introducing
legislation that would eliminate the schools from being included in any yet to be created TIF
districts.

“In my opinion, our most important development project should be the educational future of our
children,” said Rep. Fritchey. “Yet time and time again, we see TIF districts being created on
the backs of their schooling. It makes no sense to keep taking dollars from our schools and only
give them change in return. Schools never should have been tapped for TIF funding in the first
place. It is time to put the practice to an end.”
 
The Raise Your Hand coalition, a public education advocacy group that has been vocal in
support of TIF reforms, applauded the idea as both needed and overdue. "Schools are not in the
economic development business, they are in the business of educating of our children,” stated
Rep. Fritchey Press Release
TIF Reform Package
August 22, 2010
Page -3-

Wendy Katten. “Chicago Public Schools’ property tax revenues need to stay with CPS and pay
for education, not be diverted for other purposes.”

Rep. Fritchey acknowledged that TIF funds are often tapped for new school construction but
maintains that schools would be better off if the money was never taken in the first place. “It
would be different if more money was going to our schools than is being taken from them, but
unfortunately, that’s just not the case.”

3. Direct the Auditor General to Perform a Comprehensive Audit of TIF Districts

Rep. Fritchey additionally announced that he is filing legislation directing the State Auditor
General to perform a comprehensive compliance audit of the City’s existing TIF districts.
Fritchey maintained that the purpose of the audit is to ensure that monies expended from the
funds are done so properly and in accordance with the applicable statutes and ordinances.
“There is no question that TIFs can play a significant role in spurring development when
properly created and used,” stated Rep. Fritchey. “But whenever we are talking about taxpayer
dollars, we should take every precaution to make sure that every dollar is being properly spent.”
A recent sample audit conducted by city Inspector General Joe Ferguson on just a portion of one
of the city’s TIF districts found hundreds of thousands of dollars that were improperly spent as
well as over one million dollars that had been unaccounted for.
Several years ago, Rep. Fritchey passed legislation directing an audit of the Chicago Transit
Authority. The resulting report from Auditor General William Holland provided the foundation
for sweeping mass transit reforms in the region. Fritchey said that that experience provided him
the incentive to seek an audit of the TIF funds.
“As the old saying goes, sunshine is the best disinfectant,” said Rep. Fritchey. “I would think
that the stronger a proponent one is of TIF districts, the more one would want to make sure that
they are being used properly and efficiently.”
Rep. Fritchey, who is currently running for the Cook County Board seat being vacated by Forrest
Claypool, and will be leaving the Legislature at the end of this year, acknowledged that he
wouldn’t be around to see his initiatives through to completion. But he maintained that he is
confident that there are a number of his colleagues that will be willing to continue upon his
efforts.
“I am certain that there will be no shortage of legislators willing to stand up and fight on behalf
of taxpayers to make sure that they are getting the most for their hard-earned money,” said
Fritchey. “And in one capacity or another, I intend to be right there with them.”

###