By John Ruberry
While I was on vacation near Da Tech Guy’s base–New England–my Facebook feed was dominated by stories on the sticker shock Chicagoans, particularly better-off North Siders, received when they opened up their 2019 property tax bills.
One North Side woman, Liz Gold, when speaking of her gargantuan bill, told CBS Chicago, “This is out of control.”
More from CBS Chicago:
She and her family have lived in their 1890s rehabbed home in Ravenswood since 2001. They had hoped to stay until they were hit with their recent Cook County property tax bill that may force them out.
“Overall for the year it increased by 60%,” she said. “We are now paying almost $21,000 — $20,200.”
She said they had been paying $12,000.
Gold said the extra $800 a month they need to find to pay their new yearly bill erased any college money they had hoped to save for their youngest son.
Most Chicagoans are receiving a more modest tax hike, but here is a family that has to come up with $10,000 to continue to live in their home.
Now Gold wants to move from Chicago, which, by the way, has funded its pensions only at 23 percent.
She won’t be alone if she joins the Illinois Exodus. Chicago has been losing population for several years and the Land of Leavin’ has been suffering from declining population for five straight years. Rising taxes to pay for often lavish underfunded pensions for government retirees, most of them members of public-sector unions, are the heart of the problem. Not just for Chicago, but across the state.
Public-sector unions are simply the government employee wing of the Democratic Party. And Chicagoans reflexively vote Democratic. As they old Irish saying goes, “You made your bed, now sleep in it.”
Chicagoans moving to suburban Cook County–Chicago is the county seat–will be burdened by the county’s own woefully underfunded pension programs. And if Gold chooses the wrong suburb, they’ll have to belly up. Niles, for instance, the town just west of where I live, has far more retirees collecting pensions than active employees. Chicago, although not as much as Niles, has more retirees than current workers. Math is a stubborn thing.
Illinois’ pension plans are the worst funded among the states. Currently 26 percent of the budget is dedicated to pensions–more than the state spends on education. Voters in Illinois will be asked to approve an amendment to change the state from a flat-tax income tax state to one with graduated rates. Meanwhile the number of Illinois retirees collecting six-figure pensions increased by 74 percent since 2015. And after sitting on the bench for a little more than a decade, the average retired judge in Illinois has collected $1.2 million in pension income.
The Chicago edition of the Illinois exodus is having a negative effect on housing prices. If property taxes go up by $10,000, you can expect home values to decrease by that much. Or more–as not even Illinois politicians are dumb enough to claim that the latest rash of state and local tax hikes will be the final ones to fix the pension bomb.
Outside of Chicago, there are more pension bombs. Rockford’s mayor says that pension payments might consume 60 percent of its budget by 2025. Pension obligations forced Peoria last year to layoff 27 municipal employees.
Chicago’s new mayor, Lori Lightfoot, has suggested that the state–I hope she knows that it has its own pension problems–assume the pension obligations of her city and other local governments. Illinois’ new governor, JB Pritzker, is understandably cool to the idea.
That’s like having Puerto Rico transferring its financial problems to Venezuela.
There is one way out of this mess, as I’ve said before. The Illinois constitution needs to be amended to eliminate the pension guarantee clause. Years ago a Republican governor signed into a law pension cost-of-living increases at three percent compounded interest. Those increases need to go.