|
 Rockford: 38% of property taxes go to pensions.
Rockford Register Star: “City officials say that pensions will eat up 100% of
operating property tax revenue within 20 years if further reforms … are not
adopted.”
Peoria: 63% of property taxes go to pensions.
Mayor Rita Ali: “We have a broken pension system throughout the state of
Illinois; we’re not the only ones that are experiencing these huge liabilities.
Under the current structure we have, we’ll never catch up, not in our
lifetimes.”
“Not in our lifetimes.”
That was the Peoria mayor’s assessment after the city had to take $4 million out
of the current year’s budget to try to patch the holes in the budgets for the
next two years. Those holes are thanks to demands on city resources from public
employee pensions.
Peoria’s problems are much bigger than $4 million. The city should be
contributing $40 million a year to pension funds but is only coming up with $27
million. And $40 million a year will only get the pension debt 90% satisfied by
2040.
As Mayor Ali said, cities across Illinois are experiencing the same pension
problems. All told, $75 billion is owed to local government pension systems.
That means owed by taxpayers.
Add in the debt owed to the five statewide systems covering teachers, lawmakers,
state employees and judges, and the grand total is nearly $219 billion in public
pension debt.
That number is meaningless to most people. Break it down, and every household in
Illinois owes over $45,000. No other state comes close to the kind of debt
Illinoisans owe their public pensions.
Translated yet again, it means someone promised public employees $45,000 more
than your family could comfortably afford. That somebody was local and state
politicians.
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The irony is that it is your problem, created by politicians, but politicians
are unwilling to do anything to fix it other than try to raise taxes. Property
tax hikes are their usual answer for these local pensions.
As a result, Illinois ranks No. 2 in the nation for its property tax rates. Each
year 2.27% of a home’s value goes to property taxes – double the national rate.
A statewide hike in the income tax was Gov. J.B. Pritzker’s solution, but voters
refused him, and he turned to nickel-and-diming taxpayers.
When state and local taxes are added, the average Illinois family pays more than
the average family in any other state: $9,500 roughly per household. That is 15%
of the median U.S. household income of $63,218.
People are leaving Illinois as a result, with the state recording its first
census loss in 200 years. Those who stay are seeing high taxes shrink their
housing dollars and purchasing power.
“You can’t build new construction right now because the taxes are so high and
nobody’s gonna afford that,” said Chris Stephens, a real estate broker in
Skokie, Illinois.
“We need to get our pensions and infrastructure fixed in order for [Illinois] to
really prosper and be a viable place where people want to invest and live and
buy again,” he said.
So how do we get our pensions fixed?
Peoria Mayor Ali said it: “The only choices that we have right now until we can
work with Springfield to fix the broken system is those Band-aid approaches,
those short-term strategies because we’re in a survival mode.”
Let’s underscore that: Work with Springfield to fix the broken system.
And that doesn’t mean higher taxes in the state that already takes so much from
its people.
Brad Weisenstein is managing editor for the Illinois Policy Institute, a
nonpartisan research organization. |
