- The Quarterly
- Audit Excellence
|Quarterly: Spring 2020 - Talia Peckerman|
Following Up on Another Entity’s Recommendations: The Tax Increment Financing (TIF) Inquiry
There’s no reason to reinvent the wheel, particularly when the inventors are a group of esteemed subject matter experts who have developed thorough recommendations on a complex and controversial topic. Here’s the story of our decision to save taxpayer dollars by following up on someone else’s recommendations rather than conducting a Yellow Book audit.
Illinois State law empowers municipalities to establish Tax Increment Financing (TIF) districts. TIFs finance public and private projects designed to improve infrastructure, expand the tax base, or foster economic development, using real estate taxes generated from property value above a baseline amount. In Illinois, an eligible TIF district must (1) meet the statute’s definition of “blighted” or “conservation” (at risk for becoming blighted), and (2) pass the “but-for” test, meaning that the area would not be developed if not for the TIF program.
While researching potential TIF audit objectives in 2018, we rediscovered the panel’s report and wondered how many reforms had actually been implemented. Rather than expend our resources on a full-blown audit, we decided to add value by holding the City accountable for its promised reforms. We needed to act fast because Mayor Emanuel was leaving office in May 2019 and a new administration would need to make decisions about the contentious TIF program. So, we followed up on the panel’s recommendations in much the same way we do our own audit reports: we sent a detailed letter requesting description and documentation of corrective actions the City took in response to the panel’s report.
The panel’s recommendations were organized in a way that was not always obvious to us, which made it difficult to organize our follow-up report in a reader-friendly way. To make our report cohesive, we assumed connections between items and ideas; on the occasions where we could not, our report reads somewhat unevenly.
None of the above is meant to imply that the panel’s report was executed poorly, and we are certainly not saying that we could have done a better job. The panel was comprised of subject matter experts, guided by their own standards and a quick turnaround. We ourselves are generalists following the Yellow Book, and we usually take longer than three months to complete an audit.
It’s not uncommon for jurisdictions to convene working groups, task forces, commissions, etc., when charged with generating recommendations for improving a program. Often there’s much fanfare around the creation of these committees and a jurisdiction’s public pledge to improve programming. Just as often, the enthusiasm eventually dissipates and the government’s actions remain a mystery, especially since commissions are temporary and don’t last long enough to see their recommendations implemented. This can be a great opportunity for audit shops to add value by following up on recommendations we didn’t make, but still holding governments accountable for their reform commitments.
About the Author
Talia Peckerman is a Chief Performance Analyst in the Public Safety section at the City of Chicago Office of the Inspector General. Talia is passionate about justice reform and bettering government, but also enjoys playing with Microsoft Excel and anything numbers. Talia is originally from New York, lived in Israel, worked in East Africa, and currently resides in Chicago with her husband and daughter.