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79,000
MORE ILLINOISANS ARE IN POVERTY BECAUSE STATE CAN’T FIX ITS CULTURE OF
CORRUPTION
Illinois Policy Institute/
Orphe Divounguy
If Illinois could have reduced corruption
to the national average, an estimated 79,000 fewer people would be
living in poverty, according to an analysis by the Illinois Policy
Institute. State lawmakers can help by passing ethics reforms. |
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 When the 2021 legislative session began, the arrival of a new
House Speaker brought hope the Illinois General Assembly would tackle
desperately needed ethics reforms.
Then Gov. J.B. Pritzker added his backing in February, telling state lawmakers
“restoring the public’s trust is of paramount importance.”
So now, with less than a month remaining before lawmakers adjourn, will the
reforms emerge that both Pritzker and Illinois House Speaker Emanuel “Chris”
Welch have said are priorities? Will those reforms be enough?
An estimated 79,000 fewer Illinoisans could be lifted out of poverty if the
state just made average curbs to its culture of corruption. Here’s why, and how.
Corruption fuels poverty and inequality
New research by the Illinois Policy Institute shows Illinois’ corruption has
left an additional 79,000 Illinoisans impoverished when compared to the rest of
the nation. That’s because corruption hurts economic growth by driving away new
investment and reducing the effectiveness of public and private investment.
Lower economic growth means disproportionately fewer opportunities for the
working poor.
The investigation into the role of corruption and state policies on economic
outcomes using data from 1981-2017 found a 1 percentage point higher level of
public corruption convictions per million residents during that period was
linked to a 0.5 percentage point higher poverty rate at the end of the study
period in 2017. States with higher public corruption convictions have higher
poverty rates.
From 1981-2017, corruption cases per person in Illinois were 41.4% higher than
in the rest of the country, according to data from the Public Integrity Section
of the U.S. Department of Justice. If Illinois had just curbed corruption
convictions to the nation’s average during that period, an estimated 79,000
fewer Illinoisans would have been living in poverty in 2017. That’s 5.6% of the
estimated 1.4 million Illinoisans who live in poverty.
This finding is consistent with the bulk of expert literature on this topic.
Globally, corruption hurts economic growth, hurts the poor and results in higher
inequality. Economic research shows corruption lowers investment, thus reducing
the rate of economic growth. In addition, higher levels of corruption raise
income inequality and poverty, because high levels of corruption increase the
ability of the wealthy and connected to manipulate laws to benefit themselves at
the expense of everyone else.
This is what makes Illinois leaders’ sluggishness on ethics reform surprising.
Less than six months ago, concerns about income inequality fueled a plan to
raise taxes on the rich, falsely promising property tax reductions and higher
funds for education as well as Illinois’ poor. Curbing corruption can help to
accomplish those same objectives, yet is there progress in Springfield?
In Illinois, corruption reaches all the way to the top with four of the state’s
past 10 former governors ending up in prison. The current governor, Gov. J.B.
Pritzker is subject to his own federal criminal investigation arising from
property tax breaks on a mansion he owns in Chicago’s Gold Coast neighborhood.
Most recently, allegations of wrongdoing forced the four-decade long House
Speaker Michael Madigan – a property tax attorney – to step down, and over a
half dozen former and current state lawmakers were hit with federal corruption
charges.
According to research published by the University of Chicago, property taxes and
corruption aren’t unrelated. The wealthy hire property tax attorneys – some of
them lawmakers whose decisions influence local government budgets – to lower
valuations of their more expensive properties, while less expensive properties
end up overvalued leaving the poorest Americans to shoulder higher property tax
burdens.
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In Illinois, former Cook County Assessor Joe
Berrios was sued for violating civil rights and housing laws by
knowingly producing inaccurate assessments that punished poor and
minority homeowners across the county.
Without reforms, Illinois will only get worse
for low-income families
Property taxes in Illinois are expected to continue to increase at a
record pace. This is because Illinois’ unfunded pension liabilities
reached an all-time high of $317 billion in 2020 and the bulk of
property taxes fund pensions.
Massive pension debt makes Illinois more prone to increases in state
and local taxes. As income and property tax burdens increased at
record pace, state government in Illinois increased pension spending
by more than 500% while education spending went up only 21% in the
past two decades. All other spending, including social service
spending for the disadvantaged, fell 32%.
In one of the most corrupt states in the nation, record tax hikes
fund outsized pension benefits instead of social services shouldn’t
come as a surprise.
According to campaign finance data, public sector unions contributed
over $15 million – 18% of all political contributions to sitting
Illinois state lawmakers – during the 2020 election cycle. So long
as politicians face their political contributors across the
bargaining table, the cost of government services to taxpayers will
continue to increase.
Research shows corruption is also a factor in the pension crisis.
States with high levels of corruption have higher pension debt,
lower actuarially required contributions and poorer pension fund
performance. A corrupt culture in Illinois makes it easier for
Illinois politicians to use higher pay and pension benefits as
rewards for the campaign cash delivered by public employee unions.
Inflating pensions fails to deliver value for taxpayers, and like
other forms of corruption it tends to benefit a few at the expense
of everyone else.
Restoring fairness and opportunity in Illinois
COVID-19 brought disproportionately more pain to low-income
families, particularly minorities and women with young children. The
sluggish jobs recovery also suggests the number of people who have
fallen below the poverty line has likely increased this past year.
Restoring fairness in Illinois starts with meaningful ethics
reforms. If reforms are packaged together, there are specific
reforms, as well as bills that should serve as the models for those
reforms. The path forward:
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empowers the watchdog charged with holding
lawmakers accountable for wrongdoing. Those reforms are embodied
in House Bill 2774.
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improves transparency by improving financial
disclosuresfrom lawmakers. House Bill 3751 and Senate Bill 1597
would achieve that goal.
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prohibits members of the General Assembly from
working as lobbyists to executive agencies and local
governments. House Bill 3664 calls for that change.
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requires a cooling offperiod before lawmakers
can become lobbyists to the General Assembly after leaving
office. The revolving door would be stopped by House Bill 3486.
These simple changes could pave the way to less
fiscal mismanagement. Anti-corruption nonprofits and groups that
advocate for the poorest communities in Illinois share this goal: a
fair and more inclusive Illinois government that works for everyone.
Ethics reforms would be a good start.
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