Can Illinois Be Saved?

Illinois State Capitol

Illinois State Capitol

Capitol Fax Blog led me to this Illinois State-Journal article about the economic future of Illinois by Jorge Chapa of the University of Illinois.

Demographics point to minorities making up an increasingly higher proportion of the state’s population.

The oldest part of the population is white, better educated and has a higher per capita income than the younger part.

As the age-race shift progresses, Latinos and African Americans will make up a much larger proportion of the workforce.

For a variety of reasons, to date, neither group has attained the education levels of whites…

If such differences persist, they will have a significant negative effect on the Illinois economy and state budget…

Where will this money come from if a large part of our future workforce has low levels of education and lower earnings?

This sounds a lot like the analysis that Governor Jim Thompson’s demographer came up with after the 1980 census.

Can’t remember the man’s name, but he also ran a Chinese restaurant on MacArthur Avenue.

He wrote an article for a scholarly journal saying that the ratio of taxpayers to tax dependents in Chicago was too low to save the city and that the question was whether the rest of the state could remain viable.

The Thompson PR folks wouldn’t let the article be submitted without that observation being removed.

That was over thirty years ago.

Guess we know the answer.


Can Illinois Be Saved? — 5 Comments

  1. Add demograhics (young vs old, less educated/lower income vs higher educated/higher income) to the long list of problems.

    – Unfunded pension liabilities (money that should be in the pension fund right now but is not.

    – Unfunded healthcare liabilities (money projected will have to be paid in the future but there is no savings to pay for it).

    – Bond debt payment schedules.

    – TIFs (redistribution of property taxes).

    – Public sector salary and benefit hikes especially since the late 1990’s (hiking salaries hikes the pension).

    – Deferred maintenance on infrastructure and public sector buildings.

    Instead of having a plan to deal with reality, strategies involve blame (the 1% have to much wealth, jobs went overseas, Federal and State aid is shrinking, the taxing districts did not properly fund the pensions, etc. all of which have points and counterpoints but none the less we have to deal with reality).

    The lack of money problem keeps getting worse.

    There is no realistic plan in place for many of these taxing districts.

    The system in Illinois is such that a finger can always be pointed here or there to place blame.

    Placing blame does not solve the finance dilemma.

    So we creep along with service cuts & tax hikes while incredibly current salaries & current benefits & retiree healthcare benefits and pension benefits were hiked over a 40 year plus period since 1970 after 1 sentence was added to the Illinois state constitution in 1970 via the Illinois Constitutional Convention that was approved by voters on December 15, 1970 that pension (& the IL Supreme Court has through Kanerva vs Weems decision concluded retiree healthcare is a retirement benefit) benefits are contractual and cannot be diminished or impaired.

    Illinois State Constitution > Article XIII – General Provisions > Section 5 Pension and Retirement Rights.
    Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

    But there have been no solutions substantial enough to come close to addressing the underlying problems.

    Too much current spending and hiked pension and hiked retirement healthcare benefits and hiked bond payments extending into the future.

    And each taxing district has problems with its empire, but taxpayers have to be worried about how all the taxing district empires on the property tax bill and State Income Taxes and Federal Income Taxes plus sales taxes and this tax and that tax and this fee and that fee.

    There is no plan for addressing that.

    There is no way for a taxpayer to easily figure out all the debt and promises to which politicians have obligated them to pay going forward 5, 10, 15, 20, 23, 30, 35, and 40 years and beyond.

    It’s a big convoluted mystery.

  2. The TIF factor must also be considered.

    Because (in a 4% property tax rate environment–contrasted with 1.4% National average) zero new growth will be possible ‘ but for ‘ tif districts, the only source of revenue to support schools and other taxng bodies will be current property taxpayers.

    Once the mean rental price no longer exceeds current mortgage rates + property tax rates, cash buyers of homes will disappear, accelerating property values’ race towards zero.

    With Lakewood tif maneuvering to pawn off the entire bill for educational costs of tif children onto Woodstock, 4% property taxes will accelerate more rapidly towards 10% property taxes, and destruction of all property value is insured.

    In Woodstock with property tax rates over 4% of home value, that point has been passed.

    Then the detritus will be snatched up by opportunistic investors who helped engender these circumstances, or if Detroit level crisis is reached, vulture investors may enjoy the benefits of Federal bailouts.

    Neighboring communities will be taxed at higher rates to pick up County-wide demand for funding,
    once the weakest community (Woodstock) is effectively destroyed.

    The next-weakest community will now enter the death spiral of property values, and so on.

  3. One thing nice about our nation being divided into 50 states.

    If you move FROM Illinois, you no longer are financially responsible for the negligent Illinois politicians’ fiscal disaster they’ve created.

    It amazes me how stupid and incompetent the Illinois Democratic representatives really are.

    If they’re not stupid and incompetent, the only alternative is they’re malicious in their actions.

    Jack Franks….you are one of the losers who are responsible for the fiscal decisions that have condemned generations of Illinoisians (who cannot move out of this pit of a state) to pay for your FAILURES.

    How long have you been going to Springfield – 17 years?

    What a disgrace.

  4. Skeptic is right on target ….again!

    And Chapa the author of the piece is a lunatic if he really believes the nonsense of his concluding 3 lines.

    The third worldization of Illinois will have many unpleasant surprises for the White who remain in this degenerate state ……. in the future they won’t be so worried about their financial safety ……. only their physical safety!

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