I went to a recent budget open house for the City of Peoria, and this graph caught my attention:

Our budget deficit is approximately $10 million. Our debt service (the amount we pay on principal and interest per year) is nearly $19 million. That debt service includes money borrowed for the recent Civic Center expansion, the Peoria Public Library renovation/expansion, acquisition/infrastructure work done in TIF districts, and some other infrastructure projects.
The money to pay for this debt comes from various sources. The Hotel, Restaurant, and Amusement (HRA) tax pays for the Civic Center expansion. A portion of our property taxes is specifically designated for the library’s recent capital projects. And debt incurred in TIF districts is covered by the new taxes produced by the TIF (the “tax increment”) — with one notable exception: MidTown Plaza.
MidTown, home of the now-shuttered Cub Foods, has never paid for itself. While there has been some incremental increase, it’s not enough to cover its own debt service. Money from the general fund makes up the difference. Staff is quick to point out that they recommended against that TIF, but the council voted for it anyway.
As if that weren’t enough, the council has committed to taking on more debt: $39.5 million for a Marriott Hotel to be built across the street from the Civic Center, to be paid for with the tax increment within the newly-created Hospitality Improvement Zone (HIZ) TIF plus a 1% sales tax increase within the TIF. The city hasn’t had to sell the bonds yet because the hotel developer has been unable to get supplemental financing through bank loans.
Think about this debt and the taxes that pay for it when the council is haggling over closing its structural budget deficit. They have no problem raising or maintaining taxes for non-necessities and developer welfare — even in the leanest of times, as the hotel deal shows — but feign frugality when it comes to paying for basic city services. They cut police and code enforcement personnel, reduce road maintenance, and institute other cost-saving measures ostensibly to keep taxes “low.” In reality, the city is acting no differently than a person who balances his household budget by cutting his grocery purchases while maintaining (or even increasing) his cigarette consumption.