Category: Musings

Published September 4, 2013 at the Rock River Times

Rockford’s 32 Tax Increment Finance (TIF) districts cost taxpayers $2.75 million in 2012, according to a recent report by Finance Director Chris Black. That deficit was projected to increase to $11.38 million by 2023, before the trend reverses. This alarming news has led to the creation of a committee to look into the financial status of each TIF district. As long as this committee is impartial and objective, it could represent a positive step toward curbing Rockford’s TIF addiction.

What is a Tax Increment Finance district? In short, TIF districts are designed to help blighted areas by diverting public revenue toward redevelopment and improvement in those areas. The property tax allocated to various government entities within a designated district is “frozen” at the point the district is created. Any future increase in property tax revenue is captured in a fund and used to finance public infrastructure or reimburse private developers.

In theory, improvements spurred by the use of TIF will raise property values, which in turn will generate more money for the fund. This is money that would otherwise have gone to other taxing bodies, such as a county government or school district. This effectively deprives them of that revenue for the life of the TIF district. They continue to receive the same share of property taxes they received when the district was created.

Published August 7, 2013 at the Rock River Times

Congress passed the American Recovery and Reinvestment Act of 2009 in order to use Federal funds to stimulate the US economy, which had tumbled into severe recession. That February, the US unemployment rate hit 8.3 percent. The unemployment rate in Rockford was 14.1 percent in January 2009 and peaked at 20.3 percent in January 2010.

The Federal stimulus package provided $1 billion to the Community Services Black Grant Program for two years, ending on September 30, 2010. The stated purpose of this fund was to reduce poverty, revitalize low-income communities, and help low-income Americans. This would be done by providing services addressing employment education, better use of available income, housing, nutrition, and health.

The State of Illinois awarded Rockford’s Human Services Department $1,062,800 out of this fund. The Office of Inspector General of the US Health and Human Services Department later conducted an audit of how 56 percent (roughly $599,000) of that amount was spent in Rockford and determined that a hair more than one third of the audited funds were unallowable under the Recovery Act. A further $141,796 was deemed “potentially unallowable.” So the audit determined that fully 58 percent of the funds they examined were either unallowable or potentially unallowable.