If you haven’t thought about moving before, you might change your mind after reading this analysis by Wirepoints.
By Ted Dabrowski and John Klingner
Illinois’ combined state and local pensioner debts have reached absurd levels. When divvied up between Illinois’ households, the “shadow mortgage” each one is on the hook for now totals hundreds of thousands of dollars per household, if not more, depending on who politicians target to repay those debts.
As Gov. J.B. Pritzker and other lawmakers try to extract that kind of money from Illinoisans, they’ll fail, for the simple reason that the amounts have become overwhelming.
Too many households don’t have the means, while others won’t stick around to pay for it.
They’ll just leave.
And as Illinoisans leave, the shadow mortgage on those who remain will jump. The crisis will only deepen.
The shadow mortgage
A simple calculation based on Moody’s state and local retirement debts puts the shadow mortgage each Illinois household is on the hook for at $90,000.
That’s what you get when you divide Illinois’ $424 billion in retirement debts (see appendix) by the state’s 4.8 million households.
But $90,000 is not a real number.
Too many families in Illinois don’t have the means to take on that kind of debt. So the real burden on households with the means to pay is much higher.
Maybe the more “realistic” shadow mortgage amount is $215,000 per household, which is what you get when you impose the $424 billion only on those households with incomes of $75,000 or more.
Does Pritzker really think those households could pay down an additional mortgage of $215,000, even if they were willing to?
So what then?
Go after only those households with incomes of $200,000 or more, like Pritzker does in his proposed progressive tax plan?
Then the shadow mortgage on those 330,000 households jumps to $1.3 million each.
The amounts get crazy.
And pensioner debts already consume more of the Illinois budget than anywhere else in the country.
State government projections show that these debts will consume at least a quarter of the budget for the next 25 years – and that’s under their rosy scenario.
The evidence is overwhelming that there’s more pensioner debt than can ever be taxed. If Pritzker continues to reject the need for a pension amendment – and the need for a reduction in pension debts – then he’s simply ignoring the evidence.
Which means that if he doesn’t want to fix pensions, he’s going to have to go hog-wild with tax increases to get the money needed to pay down all that debt.
Expect the exodus to increase as Illinoisans finally figure that out.
For more on Illinois’ growing “shadow mortgage,” see:
- “Wealthy” Chicago households on the hook for up to $2 million in debt each under progressive approach to pension crisis
- Every Illinoisan Must See These Two Charts In The Wall Street Journal
- Moody’s vs. Illinois politicians: $100 billion difference in pension debts
- A booming market can’t save Illinois pensions
- Rhode Island Supreme Court Shows Illinois The Way On Pension Reform
- New IRS data reveals winners and losers of wealth migration across 50 states