Tax increment financing districts divert public property tax dollars with little oversight, letting cities keep special taxing powers for decades, often misusing funds and shortchanging taxpayers.
Illinois lets cities divert a large share of property taxes into special accounts called tax increment financing districts, often with little oversight. What was meant to boost struggling neighborhoods has instead become a way to funnel property tax dollars into private deals.
What is a TIF?
A tax increment financing district is an area where property tax revenue is set aside in a special fund. That extra money is then supposed to be used by the city to pay for local development projects, such as land purchases, demolition, or site prep – costs that benefit private developers instead of going to schools, parks, or other public services.
The Cook county clerk’s office reported that in 2023, $1.36 million in property tax revenue, 42% of Chicago’s $3.23 million total tax levy, was diverted into tax increment financing funds. In suburban Cook County, $428.3 million , or 25% of $1.69 billion in total property taxes, are allocated to these zones. The money diverted would cover the current city budget shortfall. When property values grow within a tax increment financing district, the amount of tax revenue diverted into the fund increases, but where is the money going?
One high-profile answer is Lincoln Yards, a luxury development on Chicago’s North Side. TIF districts were created under Illinois law to help revitalize blighted or economically struggling neighborhoods by investing in local improvements. But in this case, the city approved up to $1.3 billion in TIF subsidies to support infrastructure and amenities for a high-end project in one of the city’s most valuable areas. Instead of helping disinvested communities, public dollars were diverted to support private development, highlighting just how far TIFs have drifted from their original purpose.
Without clear limits, cities can treat tax increment financing districts as a permanent source of money. Under current law, cities can extend the life of these districts well beyond its original 23-year time limit through repeated 12-year extensions approved by the state, with no limit on how many times this can happen. That means taxpayer dollars meant for other important services can be locked away for decades, often without delivering the promised results.
Lawmakers should cap tax increment financing extensions and ensure public dollars are returned to where they’re needed most. Illinois communities deserve real accountability and real property tax relief.
Too often, tax increment financing districts are allowed to operate unchecked, continuing for decades with little transparency or public oversight. Unlike other tax dollars that are budgeted each year for schools, parks, and public safety, tax increment financing money is often spent behind closed doors and can keep flowing for decades.
Lawmakers should cap how long tax increment financing districts can last and limit the number of times they can be extended. Returning those dollars to general use would bring much-needed transparency and real property tax relief for Illinois residents.
