A Tale of Two Cities: Reinventing Tax Increment Financing

Tax increment financing (TIF) is a mechanism that allows municipalities to earmark tax revenues from property value growth within a designated area suffering from blight – a TIF district – in order to finance development in that same area. TIF has become the economic development tool of choice in hundreds of municipalities throughout Illinois; it is especially popular in Cook County. In 2005 there were 373 TIF districts countywide, earning over $686 million in property tax revenue – nearly matching the County’s entire 2005 property tax extension of $720 million. Two-thirds of the county’s municipalities had at least one TIF in 2005; Chicago alone had 136. Taxpayers in Chicago paid more property taxes to TIF in 2005 – $386 million – than they did to Cook County.