Bears stadium tax break could cost Illinois billions more in other development subsidies

Two weeks after megaprojects property tax break bill lead sponsor Bill Cunningham said that the Illinois state senate was “going to take our time with this” and “getting it right is more important than getting it done quickly,” the senate is continuing to (tries to think of football metaphor) run down the clock (nailed it!):

The legislation has stalled in the Senate over concerns about whether its property tax relief provisions are meaningful for area school districts and residents.

“One of the subject areas we’re spending time on is the property tax relief element. There are some details there that we’re working through and that work will go on through next week,” state Sen. Bill Cunningham, a Chicago Democrat involved in stadium-related negotiations with the Bears, said Thursday.

“Property tax relief” here means, you will recall, taking half of the payments in lieu of property tax the Bears and other developers would make instead of property tax payments — at a vastly reduced rate — and putting them in a fund to provide property tax rebates to regular people. Since this money would be getting diverted from the local taxing district, which could then be forced to raise property taxes to cover the difference, it’s a pretty dumb example of robbing Peter to pay Paul; it would also only provide an estimated $1.29 per homeowner, which is leaving legislators unenthused. (Cunningham said the senate is “seeing if there’s a way we can boost that number, or if we can better target the property tax relief to make it more meaningful,” which sounds suspiciously like “we’re hoping to find a math where numbers add up different.”)

A bigger concern than how to slice off a piece of tax-break pie that’s bigger than the entire pie, meanwhile, is whether subsidizing a Bears stadium would create of cascade of tax breaks for other future projects as well. Under the megaprojects bill, notes Good Jobs First research director Amanda Kass, any project costing at least $100 million to build would be eligible to pay reduced PILOTs:

The use of tax increment financing, or TIF, across Illinois has already poked holes in the property tax base by tucking away billions into special funds that can only be spent within certain geographic boundaries.

“Creating this program is going to poke even more holes in that Swiss cheese,” Kass said, noting the legislation also limits how much local governments can tap into growing property values and pays relatively little back for property tax relief.

How much would those budget holes cost Illinois? There’s no way to say, because we have no idea how many $100 million-plus projects would tap the megaprojects benefit, or how big a tax break each would receive. If the Bears project in Arlington Heights could hit $2 billion in tax breaks, then it’s pretty reasonable to worry that the total megaprojects bill cost to taxpayers could end up in the billions of dollars, or even the tens of billions.

(And before someone raises this point: Yes, these would be projects built on properties not currently generating a lot of tax revenue, so government receipts wouldn’t actually go down by that amount. But costs of providing roads and schools and police and fire services, etc., would go up, and there would be less new tax money coming in to pay for it. Plus, if these are projects that developers would have chosen to build somewhere in the state anyway, but are happily taking a huge tax break for if offered, then that is indeed money it’s costing Illinois taxpayers. For more on this, see: Madison, Oscar.)

There is a hard deadline for the senate to decide on a megaprojects bill — it is set to adjourn on May 31, and still needs to work out a bunch of other stuff before then including an entire state budget — though if it doesn’t act, or doesn’t act in a way that makes Bears execs happy, it’ll be up to team leaders to decide whether they really want to move to Indiana, or if they’d rather take more time to hash out something in Illinois. The Tampa Bay Rays blinked, maybe it’ll be a trend, only one way to find out!