Tax Group Warns Chicago’s $1B TIF Budget Sweep Creates Costs

Chicago’s go-to fiscal referee is raising alarms over Mayor Brandon Johnson’s plan to pull a record $1 billion from the city’s tax increment finance districts to plug budget holes and help pay for a new teachers contract.

In a report released Monday, the local watchdog group Civic Federation said the administration’s revamped surplus declaration process has effectively turned TIF into a stealth property tax, the Chicago Sun-Times reported, diverting funds meant for reinvestment in struggling neighborhoods to cover operating needs at City Hall and Chicago Public Schools.

According to the watchdog, the shift is both politically convenient and structurally risky. Surpluses have spiked from $177 million in 2017 to $712 million this year and are projected to hit $1 billion in 2026. But the group argues that the one-time boost engineered by Johnson — which sharply limited aldermanic prerogative to stockpile TIF dollars for pending projects — can’t be repeated. With many of the city’s 108 TIF districts set to expire beginning in 2030, the revenue well is expected to run dry as budgets across local agencies remain under strain.

The report highlights a core tension in the program. TIF was designed to channel growth in property values back into the areas that generated it, typically via infrastructure upgrades or development subsidies. Instead, Chicago has leaned on it to fund day-to-day operations, a move the Civic Federation says undercuts the very communities TIF is meant to lift.

Once districts expire, their restored assessed value flows back into the tax base. Local governments can then apply existing tax rates to a larger base, producing a permanent levy increase that doesn’t count against statutory caps.

That dynamic has fueled fierce pushback inside the City Council. Even allies of the mayor balked at the size of this year’s sweep during budget hearings. Alderman Michelle Harris, who represents a South Side ward that relies heavily on TIF to finance public amenities, warned that a broad sweep would wipe out long promised park, school and library projects.

Alderman Nicole Lee voiced similar concerns, saying a field house in her ward could lose virtually all of its set-aside funding while waiting on routine cost estimates.

The Civic Federation’s broader message is blunt: Chicago can’t rely on TIF surpluses to balance budgets forever.

— Eric Weilbacher