She Kept 'Em Honest | Neighborhood News | Chicago Reader

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She Kept 'Em Honest

It's hard to make sense of taxes, but thanks to Edna Pardo, we have some idea where our money's going.

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This spring Edna Pardo finished another of her guides to the city's budget. For more than 20 years she's been quietly putting out "A Guide Through Chicago's Tax Maze" for the League of Women Voters--making her a legend among the watchdogs who pore over budgets in an attempt to hold the city accountable for the way it spends our money.

Her first booklet--they're published every four or five years--came out in the early 1980s. The current one--written with the help of three other league volunteers--will probably be her last. "I'm 81 years old," she says. "It's time to leave this to the next generation. The three who worked with me--Olga Buenz, Priscilla Kersten, and Kathy Monk--know this stuff pretty well."

The guide, available for a small charge in English or Spanish at 312-939-5935, is a must for anyone who wants to understand taxes and how they're spent. It's small, easy to follow, and filled with charts and cartoons by Peggy Lipschutz, Pardo's longtime illustrator.

Pardo believes it's important that the public understand what happens with tax money at the local level, especially now, with President Bush cutting federal taxes. She thinks people are being bamboozled into believing they're getting something for nothing, though nearly every tax cut on the national level results in either a hike in state or local taxes or fees or a cut in essential services. "It's very simple--either you fund government services or you don't," she says. "People want basic services, so they have to be paid for. If you're not paying for them one way, you're paying for them another."

Pardo has been a champion of transparency in government since the 1960s, when she was raising three kids on the west side. "I got started by looking at school funding because I was involved in the PTA at my kids' school," she says. "They went to the Lewis school and then on to Austin High School. I got involved in the PTA, and I joined the League of Women Voters. I got to work with some of the top school funding people in the state. These were very smart people--league volunteers--and I learned from them." Among other things, they taught her how to sift through piles of state and local budget books and tax records.

Her booklet is something of a primer, in that it assumes no previous understanding of municipal economics. It begins with a series of definitions: A tax is "a compulsory payment to the government to provide services of general benefit to all"; a regressive tax puts "a relatively higher tax burden on middle and lower income families than on higher income families"; a proportional tax "treats all taxpayers the same"; and a progressive tax "puts a relatively higher tax burden on those with the most ability to pay."

It includes examples. One regressive tax is a "sales tax on food or medicine," which requires "the same percentage regardless of the income level of the purchaser"--unlike a proportional tax, such as the state's flat 3 percent income tax rate, or a progressive tax, such as the federal income tax, which is "levied at increasing rates as the level of income increases."

The booklet tries to show that our main sources of government funds are too regressive or too unpredictable. It makes the case, for instance, that too much of a school district's funding comes from property taxes. "That means that a wealthy town with a deep property-tax base can afford to pay more money for education," says Pardo. "Yet all the children from all the systems have to take the same tests and are accountable for the same results. It's not fair."

Pardo would like to help curtail government's dependence on regressive taxes. If she has a political role model, it's former state comptroller Dawn Clark Netsch, who ran for governor in 1994 promising to shift the state as much as possible away from property taxes and toward graduated income taxes.

"I know all too well what happened to Dawn in that campaign," Pardo says. Netsch was bashed by her opponent, Jim Edgar, as a tax-and-spend liberal. The public, apparently eager to believe Edgar's promise to hold the line on both taxes and budget cuts, voted overwhelmingly against her. "Edgar blasted Dawn, and then did what she said had to be done--he wound up raising taxes," says Pardo, laughing. "I would have hoped everyone would have learned a lesson from that."

But if politicians learned any lesson from that campaign, it was that being honest about the need to raise taxes could be fatal. That dismays Pardo. "There's a reason we have government--we need schools and streets and police and firefighters, and the list goes on and on," she says. "These things are essential to the quality of life. You can't get them for nothing--but that doesn't stop some politicians from trying to pretend that they can."

In her booklet Pardo lists all the different programs and services funded by the city. Then she shows which taxes pay for what. She makes it clear that pension obligations and the repayment of debt consume about 75 percent of funds the city gets from property taxes. "We're borrowing more than ever," she says. "There are long-term debts, and short-term debts, and revenue bonds. We also depend more on fees and fines, like parking tickets. There's a reason the city's cracking down so hard on parking tickets--it needs the money."

She spends several pages on revenue gimmicks such as Tax Increment Financing. A TIF, she writes, is a "major lever" that Chicago and other municipalities "use to bring developers into 'blighted' residential, commercial or industrial areas. When the land is developed, the increase in taxes (incremental revenue) within the designated area (TIF district) is set aside to pay for public improvements."

But there are practical and ethical problems with this arrangement. The taxes that still go into the general revenues "are held at the levels they were when the TIF was established--virtually freezing property tax revenue received by all the taxing districts within the TIF during the 23 year legal life of the districts," Pardo writes. "This denies the other taxing bodies (such as the school districts) their share of rising tax revenues during that time." Moreover, there's no guarantee a project will generate enough new taxes to repay the loan; if it doesn't the city has to dig into its general revenues.

A TIF, says Pardo, basically takes funds that could be spent on the schools and spends them on the cost of development. "We're taking money from the kids--and giving it to the developers and bankers," she says. "Is this fair? Does this make sense? The city would argue that the projects wouldn't be built without a TIF, but that's not necessarily so. A lot of these TIFs are in good neighborhoods."

Pardo says the city wouldn't have to resort to schemes such as TIFs if it could count on federal aid. Instead it has gotten unfunded mandates and cuts. "I worry a lot with these budget cuts coming out of Washington," she says. "Who's going to be hurt the most? Why, the cities, like Chicago. We're in for a long fight, I fear. I doubt I'll be around to see the end of it. But there are other bright young people working on this cause. They'll keep up the fight long after I'm gone."

Art accompanying story in printed newspaper (not available in this archive): photo/Yvette Marie Dostatni.

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