It was one step forward and, alas, another step forward on the road to financial ruin.
In other words, we need to talk about what happened in the City Council last week. It seems the mayor and his council allies remain defiantly determined to waste money, raise taxes, and plunge Chicago Public Schools into bankruptcy.
Good thing you didn’t elect Chuy Garcia—right, voters?
Before I tell you what happened in the City Council, for context, let’s start with my latest obsession and the first of these two recent steps towards financial ruin—the $110 million dollars we, the taxpayers, recently paid Wall Street lenders.
As I explained last week, Mayor Emanuel recently agreed to give Wall Street lenders $110 million in fees—which will come out of your property taxes—as part of a deal to lend CPS $725 million to pay off old debt.
In effect, we get $615 million but have to pay back $725 million.
The mayor had to pay that $110 million—what lenders call an “original issue discount”—because the CPS’s credit rating is shot.
And the reason the CPS’s credit rating is shot is that the mayor doesn’t have enough money on hand to adequately fund the schools. (Well, that and Governor Rauner seems determined to force CPS to go bankrupt.)
That brings us to the second recent step to financial ruin: the City Council debate on the TIF surplus.
Yes, my oldest obsession. Yes, I’m writing another column about TIFs. I really don’t want to. In fact, I’m ready to cut a deal with Mayor Rahm in which I agree to stop writing about TIFs if he agrees to stop abusing them.
We’ll see who blinks first.
The TIF surplus comes from the surcharge the mayor adds to your property tax bill to pay for his tax increment financing program. That’s the economic development program that’s intended to fight blight in poor neighborhoods but winds up mostly further developing rich ones.
The mayor can’t spend all the money the TIFs generate each year, so hundreds of millions of dollars get stashed in special TIF bank accounts.
The mayor won’t tell us exactly how much we have in the TIF accounts—he doesn’t want any more pressure to spend that money to bail out the schools.
But in an effort to shed some light on this matter, Alderman Carlos Ramirez-Rosa recently introduced a nonbinding resolution calling on the city to use the TIF surplus to “mitigate any [CPS] program cuts, layoffs of staff, and reductions in services.” In other words, to use the TIF slush fund to pay for the schools.
That makes sense. Only a lunatic would expose us to the mercy of carnivorous Wall Street lenders—and $110 million fees—if we could instead fund our schools with money in the slush fund.
Ramirez-Rosa got 34 aldermen to sign on as cosponsors of his resolution. And he convinced Alderman Carrie Austin, chair of the Budget Committee, to hold a February 1 hearing on the matter.
Then Ramirez-Rosa rounded up experts to testify that it might be a good idea to spend the TIF surplus—or at least to tally up exactly what we have there.
So we don’t have to pay $110 million in “original issue discount” fees on any deal in the future.
On the day of the hearing, the mayor sent his budget director, Alex Holt, to testify against the resolution. Holt’s the bureaucrat who’s been assigned the unenviable task of trying to convince people that the TIF program isn’t a scam.
Which is sort of like trying to convince Chicagoans that the mayor didn’t bury the Laquan McDonald video for political reasons.
Anyway, before the hearing, Holt distributed a fact sheet that said Emanuel had freed up about $113 million in TIF slush this year—of which about $60 million goes to CPS.
Yes, that’s far shy of the $110 million that CPS just paid to Wall Street lenders.
But you can’t expect the mayor to treat low-income schoolchildren like Wall Street lenders until those little kiddies start kicking in some campaign contributions.
Anyway, the scene was set last Tuesday for a monumental debate on the TIF slush fund.
But Austin announced she would be deferring the matter to the Finance Committee, chaired by Alderman Ed Burke, where it would likely die.
I don’t know why Austin—an especially loyal mayoral ally—deferred the resolution. She didn’t return a call.
But I am happy to report the council independents didn’t just roll over.
When Austin announced she was deferring the resolution, Alderman Rick Munoz said he objected. That set off a debate that I will paraphrase for one and all . . .
Austin: Hearing no objections, the matter’s been transferred to the Finance Committee.
Munoz: You can’t say you hear no objections if I’m objecting.
Austin: I’ll say whatever I want—because I have the gavel.
Munoz: Well, when you put it that way . . .
As a compromise, Austin agreed to have a roll call vote . . . on whether she should allow Munoz a roll call vote on sending the matter to finance.
Hope you followed all that, because I’m moving on even if you didn’t.
The vote was ten to nine against allowing Munoz to have a roll call vote.
With that, the resolution was sent to die in the Finance Committee, thus guaranteeing that the mayor holds on to his TIF slush while we get to pay more of that “original issue discount” fees to lenders.
Wall Street wins, Chicago taxpayers lose—again!!
“It was like the wild west out there,” says Ramirez-Rosa, who’s trying really hard not to say anything too nasty about Austin. As she sits next to him in the council chambers.
Having completely depressed everyone with this account, I will now try to cheer you up.
As far I as I can remember—and I’d be the guy who’d know—the Munoz roll call vote was as close as the City Council’s ever come to taking a stand against the ongoing roughly $400-million-a-year TIF scam.
Hallelujah! It’s baby steps to reform. They don’t call it incremental for nothing. v