– David Sirota
Chicago is the iconic example of all of these trends. A new report being released this morning shows that the supposedly budget-strapped Windy City – which for years has not made its full pension payments – actually has mountains of cash sitting in a slush fund controlled by Mayor Rahm Emanuel. Indeed, as the report documents, the slush fund now receives more money each year than it would cost to adequately finance Chicago’s pension funds. Yet, Emanuel is refusing to use the cash from that slush fund to shore up the pensions. Instead, his new pension “reform” proposal cuts pension benefits, requires higher contributions from public employees and raises property taxes in the name of fiscal responsibility. Yet, the same “reform” proposal will actually quietly increase his already bloated slush fund.
But it gets worse: an investigation by Pando has discovered that Emanuel has been using that same slush fund to enrich some of his biggest campaign contributors.
How a “shadow budget” is bankrupting Chicago
The new report, from the taxpayer watchdog group Good Jobs First, shows how Chicago’s roughly 150 “tax increment financing” (TIF) districts divert property taxes out of schools and public services and into what is now known as Chicago’s “shadow budget.” That’s a slightly nicer term for what is, in practice, Emanuel’s very own sovereign wealth fund.
Living up to his billing as “Mayor 1%,” Emanuel has used the fund to (among other things) offer up $7 million of taxpayer cash for a new grocery store, $7.5 million for a proposed data center, $29 million for an office high rise and $55 million for a huge new hotel (and that latter project is on top of $75 million more in tax money Emanuel has offered up to build a private university a new basketball stadium). And these are just a few of the corporate subsidy proposals in a $300 million spending spree Emanuel has championed at the very moment he has pled poverty to justify pension cuts, property tax increases and the largest school closure in his city’s history.
Contrary to the story of public employees bleeding taxpayers dry, the Good Jobs First report proves that the slush fund is the root of the city’s true fiscal problem. As the municipal budget figures show, over the last 14 years Chicago refused to make its necessary pension contributions. Yet, at the same time, the city’s TIF-based “shadow budget” skyrocketed. In effect, more and more public revenue that was contractually obligated to pensioners was being diverted by politicians to fund TIF subsidies, many of which go to subsidize wealthy corporations.
The scheme has gotten so out of control that, according to Good Jobs First, annual TIF revenues now far exceed the annual cost of funding the city’s pension systems. The report shows that in 2013 Chicago’s pension costs were $385 million whereas Emanuel’s slush fund that year received $457 million.
For his part, Emanuel has insisted that roughly a third of TIF funding goes into schools (at his sole discretion, of course). Yet, his slush fund is so opaque there’s little way to verify this claim. Indeed, Chicago’s local public radio station WBEZ recently noted that it “has repeatedly requested a breakdown of all current TIF-funded projects, but [the Emanuel administration] has not yet provided it.”
9 thoughts on “David Sirota. Chicago’s pension theft and Rahm’s slush.”
So unions aren’t suing because tif diversion is legal ?
Reblogged this on Reclaim Reform and commented:
“Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers” by Ellen E. Schultz was published in 20111 – 2012. This superbly written and well researched book mentioned that laws present at the time of publication prevented the same thing from happening to public pension funds but that legislation was being attempted to legalize the public plunder. It is well worth reading. David Sirota explains the massive theft clearly via Fred Klonsky’s blog which is reposted here.
Another one with his reservation for hell. Only not soon enough.
“After all your posturing, all your little speeches, you’re nothing but a common thief. “–Holly McClane
This really makes me sick. Why doesn’t the tribune take this story and run with it. Yeah right we all know where that rags allegiance goes to.
There is a must read in Glen Brown blog….A tale of two cities by Kevin Coval.
What media outlet is brave enough to go up against the emporer? We all know that the pension money can be paid he just doesn’t want to and will continue to blame the retirees for all that is wrong with Chicago.
Really how can we out him and have this report circulate to the public?
This is outrageous! Add to this the Billion+ they got stashed from selling the Chicago Skyway. Rahm has plenty enough to make full payment on all the city pensions!
Reblogged this on sharsandblog and commented:
Emanuel needs to remove the word “Democrat” from his name. The party itself needs to rename itself or get back to its roots–the party of the people.