Local Pensions Cause Huge Real Estate Tax Increases

An article by Austin Berg of  the Illinois Policy Institute:


Less than 50 cents of every additional property tax dollar over the last 20 years went to pay for services that raise home values. Instead, the primary driver of the rise in property taxes was pension costs.

Continued from yesterday.

Of every additional property tax dollar that went to municipal fire departments in Illinois from 1996 to 2016, 78 cents went to pensions, not protection.

Of every additional property tax dollar that went to municipal police departments, 81 cents went to pensions, not protection.

The path forward is not as complex and unfathomable as political actors make it seem.

It’s limited only by political will, which should change as more and more Illinoisans realize they’re not getting the services they think they’re paying for.

In order to protect pensioners and taxpayers, state lawmakers must amend the Illinois Constitution to allow for reductions in unearned, future benefits.

Among other things, this means ending automatic 3 percent compounding benefit increases and bringing retirement ages in line with the private sector.

Many Illinoisans, such as Vicki, are deeply frustrated with their property taxes.

But more than frustration, thousands are trapped.

The depreciation of their property outweighs what they’ve paid toward principal, meaning they would need to fork over extra cash just to sell their home.

Those who are trapped are looking to Springfield, where one of two paths will shape their future:

  1. either their property taxes (and probably income taxes) will continue to rise, or
  2. lawmakers will get serious and amend the state constitution.


Local Pensions Cause Huge Real Estate Tax Increases — 15 Comments

  1. At some point this compulsory system is no longer one of taxation but an unlawful taking of private property in violation of the 5th Amendment under US Constitution which Trumps Illinois State Constitution.

    If this upward trend continues Illinois Government can expect this challenge.

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  3. Good graphs. The best showing police costs statewide. In 2016, 26 percent of property taxes went to police protection vs 74 percent of taxes going to police pensions. The situation has deteriorated from 1996. The pension system for former Illinois government employees continues to financially devastate Illinois home owners. The Democrat controlled Legislature in Springfield is derelict in not fixing this mess.

  4. DJ’s starter to do list, for late to the party exile planning.

    1. If not already liquidated of equity, Cash Out Refi.
    2. Use Illinois idiotic Foreclosure Laws to stay in your home up to 3 years payment free.
    3. Refuse to pay Property Taxes.

    Just 10% Homeowner participation in my “Come and Take It” plan throughout the State, would crush the Courts, cripple County’s and those free Day Care Centers you call Public Schools.

    Now try figuring that one out Springfield.

  5. Funny how the recipient of one of these pensions calls it an insignificant issue.

  6. D J you are going to give Angel an anxiety attack, but what a great idea “Come and Take It” . . .this just might work.

  7. Under your “Plan”, the property taxes will continue to be paid either by the mortgage holder or the tax lien buyer.

    It will have no impact on the levy revenues of any taxing body.

  8. Look Coffey, The non- Public Sector citizens that actually foot the bills of this State, never once acted in bad faith.

    Give this rabble from Springfield on down, a heavy dose of Moral Hazard.

  9. The way to reduce the rate of increase in police and fire pension liabilities is to change the arbitration laws.

    Public safety employees can’t strike, but they can demand binding arbitration, and arbitrators are not currently allowed to look at at a county or town’s ability to pay when making their decisions.

    Negotiators are afraid to play hardball with the unions for fear that they will lose big in arbitration, and salaries and future pension obligations rise way too fast.

    That’s why the MCSD has so many employees making over $100k/year.

  10. womp womp

    …at least DJ tried. That’s pretty good for a comedian — higher effort than 95% of the state legislature.

  11. Once again I am reminded how much Chicago and the collar counties (including McHenry) contribute to the rest of the state.

    This area only gets 80% back of the money that is paid in state taxes.

    Some counties get over twice back what they contribute.

    I think a fairer distribution would significantly help property tax rates in McHenry.

  12. DJ, your plan would not work as taxes always get paid eventually.

    If you do a Cash out ReFi to take all the equity you can out and then stop paying your mortgage and taxes the lein holder pays your taxes to the county or worse case scenario is the property goes to auction and taxes are paid.

  13. That is true.
    Woodstock has declined in EAV for a decade due to this cycle.

    People are taxed out of their homes.

    REITs and vulture investors buy property (sometimes without the bank publicizing the property)

    Investor-owned properties are re-assessed at lower values.

    Rented properties are not kept up, as there is no incentive for renter OR owner to do so

    Eventually neighboring owner owned properties notice taxation disparity and appeal their own assessments

    EAV death spirals lower (relative to inflation and relative to other regions)

    And yes, schools still get the entire amount of the money they taxed.

  14. There is a push to consolidate the local public safety pension funds statewide.

    The advocates claim that consolidation will save a considerable amount of money in administrative costs.

    McHenry’s own Pamela Althoff is behind some bills to accomplish this.

    The issue has taken on some urgency because of towns like Harvey, Illinois that have pension funds that are close to insolvency.

    If the pension funds are consolidated, it is a virtual certainty that the towns that have been responsible with funding will eventually have to raise taxes to pick up the slack for places like Harvey and East St Louis.

    It’s far better to let the local funds go bankrupt and set a useful precedent that public pensions aren’t really guaranteed in this State when the guarantor is broke.

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