When 133% = 1%

Listening to Chicago’s Public Radio station WBEZ yesterday after the Cook County Board raised its part of the sales tax by one percentage point made me wonder if reporters passed 8th grade math.

The person presenting the news announced that the Cook County sales tax had been raised “one percent.”

As the main Chicago Tribune editorial points out today, the one percentage point hike in the county’s sales tax was

a “133% rise in the county’s share–from 0.75 percent to 1.75 percent–the total sales tax ris[ing] to 10.25 percent in Chicago.”

Worse was Channel 7 ABC News at 5 o’clock and 6 o’clock.

Both reported that the Cook County sales tax had been increased 1%.

Worst was the 6 PM news.

After saying that, Cook County Commissioner John Fritchey was shown saying that that the increase would be “133%.”


Comments

When 133% = 1% — 4 Comments

  1. They’re looking at the total tax which I’m guessing used to be nine and a quarter and it’s now ten and a quarter.

    There are many ways to phrase things.

    Republicans liked saying the income tax was raised 66% under Quinn, Democrats preferred saying it went up 2%–from 3% to 5%.

    Technically, both are correct.

  2. Don’t give them so much credit, Joe.

    I think they just did lazy math.

    1.75 minus .75 equals 1.

    LOL

  3. The 2015 Cook County sales tax increase from .75% to 1.75% is an 133% percentage increase & 1% absolute value increase.

    1.75 – .75 = 1.00.

    1 / .75 = 1.33.

    1.33 x 100 = 133%.

    The Cook County sales tax increase is really to fund the Cook County pension fund.

    Which in the Illinois Pension Code is known as Article 9 – County Employees’ and Officers’ Annuity and Benefit Fund – Counties Over 3,000,000 Inhabitants (CEABF).

    Per the CEABF 2014 Actuarial Report, “As of December 31, 2014 the funded ratio of the Plan is 57.5%.”

    Total Actuarial Accrued Liability $15,318,790,688.
    Actuarial Value of Assets $8,810,509,070.
    Unfunded Actuarial Accrued Liability $6,508,281,618.
    Funded Ratio 57.51%.

    So Cook County taxpayers owe the pension fund $6,508,281,618 as of December 31, 2014.

    A major problem with owing $6,508,281,618 is that its not being invested, which in turn is a problem because a pension fund if 100% funded would be generating the majority of its “income” not from employee or employer contributions, but from investment returns.

    So because its a defined benefit pension fund, the employer / taxpayer is required to fund the lost investment returns on the $6,508,281,618.

    The benefits and salaries have been hiked in the Cook County Pension Fund and all public sector pension funds in Illinois to the point they have become unsustainable.

    The benefit hikes escalated after the pension sentence was added to the Illinois State Constitution on December 15, 1970.

    The pension sentence forces taxpayers to fund benefit hikes, even if the hikes occurred in the same years pensions were already underfunded, even if the hikes occurred in the same years the current year pension contribution was shorted, even if employers provide end of career salary hikes to spike the pension.

    Also from the same actuarial report.

    Employer Normal Cost $127,176,855 (current year cost).
    Amortization of Unfunded Actuarial Accrued Liability $512,617,904 (cost to eventually reach 100% funding).
    Employer Actuarial Required Contribution $639,794,759.
    Actual / Statutory Contribution $190,598,752.

    So the Illinois General Assembly and Governors allowed Cook County to short the employer contribution by $639,794,759 – $190,598,752 = $449,196,007.

    And regarding the actuarial required contribution of $639,794,759, that itself should be analyzed as all actuarial assumptions should be to understand exactly which assumptions are used to project the contributions, such as over how many years is that unfunded liability (taxpayer IOU to pension fund) spread, assumed salary hikes, assumed life span, etc.

    Thus the need for a tax hike.

    The Chicago Tribune reported the sales tax hike is estimated to bring in $474 million a year.

    That’s 474,000,000.

    Remember $449,196,007 was the amount this years contribution was shorted when including the amortized (spread out) amount of the actuarial unfunded liability (taxpayer IOU).

    So the tax hike is to fund the pension payment.

    Because there’s another Cook County Pension Fund, this one for Forest Preserves.

    The Cook County Forest Preserve pension fund.

    Which in the Illinois Pension Code is known as Article 10 – Forest Preserve District Employees’ Annuity And Benefit Fund.

    The website for both funds is http://www.cookcountypension.com.

    The Fiscal Year (FY) for the Pension fund is the same as the calendar year, January 1 through January 31.

    The Cook County pension funds are separate from the IMRF pension fund.

    All of the counties except Cook County participate in the IMRF pension fund.

    Not all of the counties have a conservation district or forest preserve district.

    But those counties that do have a conservation district or forest preserve district would participate in the IMRF pension fund, if they participate in any public sector pension fund, and most if not all do participate in IMRF.

    Here are the IMRF conservation district and forest preserve pension funds.

    Boone County Conservation District
    Macon County Conservation District
    McHenry County Conservation District
    Vermilion County Conservation District

    Byron Forest Preserve District
    Champaign County Forest Preserve District
    DeKalb County Forest Preserve District
    DuPage County Forest Preserve District
    Kane County Forest Preserve District
    Lake County Forest Preserve District
    Piatt County Forest Preserve District
    Rock Island County Forest Preserve District
    Will County Forest Pres District
    Winnebago County Forest Pres District

  4. There are three forest preserve districts that do not participate in IMRF.

    Kendall County Forest Preserve.

    Kankakee River Valley Forest Preserve (Kankakee County).

    Piatt County Forest Preserve.

    Illinois also has Conservancy Districts, some of which participate in the IMRF pension fund.

    The following Conservancy Districts participate in the IMRF pension fund.

    Kinkaid – Reeds Creek Conservancy District (Jackson County)

    Mill Creek Conservancy District (Clark County)

    Rend Lake Conservancy District (Franklin County)

    Saline Valley Conservancy District (Saline County).

    So Illinois has Conservation Districts, Forest Preserve Districts, and Conservancy Districts that preserve land, many of which participate in the IMRF pension fund, with Cook County being unique and having its own pension fund.

    There are about 850 drainage districts in Illinois.

    Amazingly two of them participate in the IMRF pension fund.

    Green River Special Drainage District (Henry County).

    Wood River Drainage / Levee District (Madison County).

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