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Tomorrow (February 8), Chicago residents will promenade into Mayor Rahm Emanuel’s office with the golden toilet that many credit for the announcement last week by the CME Group that it will forgo $33 million in tax increment financing (TIF) funds awarded by the city in 2010 to rehab bathrooms and build a fitness center at the Chicago Mercantile Exchange.
The labor-community group coalition Stand Up! Chicago and the Grassroots Collaborative, which is organizing tomorrow’s march, count it as a victory that the CME Group will not collect the funds, which a CME spokesman said were never actually accepted or received. Now residents are demanding that the $33 million be spent on creating jobs and community services in the low-income and working-class neighborhoods that the TIF program was meant to serve.
Emanuel has pledged to increase accountability and transparency in the use of TIF funds; former Mayor Richard M. Daley was widely criticized for allocating TIF funds to some of the city’s wealthiest neighborhoods and large corporations or politically-connected developers. As Mike Elk reported here last fall, United Airlines and Miller-Coors both received millions in TIF funds to convince them to locate corporate headquarters in Chicago.
The Grassroots Collaborative—which includes the Chicago Teachers Union and the Service Employees International Union — is also asking Emanuel to impose a moratorium on TIF funds spent in the LaSalle TIF district, a downtown area home to some of the city’s wealthiest businesses and residents.
TIFs are meant to help revitalize “blighted areas” by making property tax dollars available to spur new investment that will theoretically pay off by creating jobs and increasing property values; no one can argue that the LaSalle district is “blighted.”
Stand Up! Chicago policy analyst Elizabeth Parisian told In These Times that TIF money is just the tip of the iceberg in terms of “corporate welfare” for companies like the CME Group, which announced it was renouncing the TIF money because it wasn’t needed in light of larger tax breaks from the state, as spokesman Michael Shore previously told In These Times. In December the Illinois state Senate passed a bill that exempts the CME Group from about $77 million in taxes, after the company had threatened to leave Illinois otherwise. After the legislation was passed, the mercantile exchange shifted to electronic trading, affecting job security the tax break was meant to protect.
Parisian told In These Times:
That tax break was given without any accountability for job creation or retention. They could pick up and leave tomorrow and still keep the money. It’s one thing to give millions and millions of dollars to a company like CME, it’s another to not even make sure we as taxpayers get a return on our investment…When you give money to CME, that money stays with the CME. When you spend money on the local level, it ends up in everyone’s pockets.
Stand Up! Chicago and the Grassroots Collaborative have noted that a fraction of the $33 million previously awarded to the CME Group could keep open the city public mental health clinics slated for closing. That and improvements in infrastructure and services at schools, parks and libraries would also theoretically create or bolster city jobs, mostly union positions. It is not clear if TIF funds could legally be spent on the mental health clinics, restoring hours cut at city libraries or other city services; but Parisian said it is the larger principle that matters. She told In These Times:
Thirty-three million is nice and should be put to good use, but there’s a lot more where that came from – all the other forms of tax breaks and corporate welfare…One of our members from the Brighton Park Neighborhood Council has been trying to get money to rehab a local park – as a working mother she just wants a safe place for her kid to play. But CME is getting money to renovate their bathrooms and build a fitness center.
In an editorial published in The Chicago Tribune, Parisian said:
At a time when Illinois is facing record unemployment, record poverty and record foreclosure rates, a multimillion-dollar tax break to Illinois’ most profitable large company is bad policy. Now that CME has succeeded in using its threat of relocation to extract a lucrative tax break, other businesses might line up to do the same, resulting in an unfair tax system in which companies with the most money pay the least.
Illinois and Chicago have been home to the Mercantile Exchange and the Board of Trade for more than a century, and thousands work every day to support these institutions. Rather than use its status as a billion-dollar corporation to collect millions of dollars of corporate welfare at a time when families across our state are struggling, CME should pay its fair share.
Aside from the TIF issue, the CME has been under scrutiny for other controversies, including its central role in the bankruptcy of the investment firm MF Global, which sparked the Commodity Futures Trading Commission to call for stricter oversight of the industry last week.
On February 6, CME officials apparently met in Chicago with other Midwestern boards of trade and commodities exchanges to form a joint commission to discuss strengthening self-regulation, according to a January 18 release. A press release from Stand Up! Chicago cast the meeting as an attempt to avoid increased accountability and continue the practice of self-regulation:
In the wake of the MF Global collapse, CME Group and other futures and options exchanges are attempting to keep the special regulatory status that they have lobbied extensively to retain — the right to self-regulate their clients. Such regulation is rare in the financial industry because of the obvious conflict of interest it poses. Rigorous outside regulation may have prevented MF Global’s loss of $1.2 billion in investor funds.
The march on Wednesday begins at 10 a.m. at the Chicago Board of Trade (141 W. Jackson Blvd.) and proceeds to the mayor’s office, 121 N. LaSalle.
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