Guest post by Bill Broderick
If we had to characterize the plight of the state of Illinois, our political class is focused on managing the decline of our state. Let’s review where we are and see if we can find a path forward.
Illinois is the number one state in the US for taxing entities. It is estimated that there are over 6000 governing units in Illinois, possibly ranging up to 8000+, engaged in taxing citizens and businesses, far exceeding any state. Actual count is not known.
Illinois ranks number one of fifty states in total state and local taxes paid, and number two in property taxes. The average property tax in the US is $3719 (2020) data. IL average is $4942. A serious difference!
*IL lost 250,000 jobs during the pandemic, with over 40,000 jobs still not recovered during this post pandemic period.
*Since 2020, neighboring right to work states have added 1.3 million jobs, while non right to work states like Illinois have lost 1.1 million jobs.
*IL has lost employers over the past decade, including majors such as Boeing, Catapillar, Tyson Foods, and Citadel, along with many small to mid-sized companies.
*What is not measurable is the number of IL employers who are growing staff and facilities outside of IL, avoiding the IL tax and regulatory climate of the state.
*IL population shrank by 104,000 between 2021 and 2022, ranking number three in losses, per the census bureau.
*IL has 37% fewer job postings today compared to all states, so the job market for careers is sub-par to negative.
*IL unemployment rates are consistently in the top five in US versus the country.
*Illinois economy is $31 billion smaller today given the pandemic and eight years of population losses. If the IL GDP included that $31 billion, consider the hundreds of millions of lost tax revenues.
*IL had .7% economic growth in 2022, and first quarter of this year is .25%. Compare the results to Nebraska and North Dakota at 12% growth in 2022.
*IL state government received over $8.6 billion in federal funds during the covid period and spent most of the money on new programs and pay increases, not on debt reduction.
*IL ranks number one in public sector employee pay compared to fifty states, with average state-wide earnings of $59,000 per year.
*IL has $313 Billion in unfunded pension and benefits (per Moody), ranking number one in the nation in debt versus size of state. While it has 3.8% of the country’s population, IL carries 15.5% of the nation’s total unfunded pension debt.
*IL spends 26% of state budget for pensions and benefits, compared to the national average of 11%. It’s the biggest single budget item. The current funding of IL pensions is 38% of total obligations, ranking 48 out of 50 states compared to the ideal funding rate of 85%.
*Chicago has $48 Billion in pension debt, separate from the $313B noted, an amount larger than the pension debt of 44 states.
*IL will spend $1 billion+ for health care benefits for non-citizens over next year.
* IL business community pays 2nd highest commercial property taxes in the US.
*”Based on a survey of personal injury cases, IL ranked fifth in the US for the most personal injury cases per capita, with a total of 2,887, which is 140% over the national average. This is a red flag for employers considering location in IL.”
*Over the past three years, 24 states have cut taxes, while IL takes a pass.
*IL ranked 40th in poverty rate, 46th in homeless rate and 49th in unsheltered homeless.
*And on a final note, IL ranks third in # of politicians convicted of federal crimes.
Given the facts noted, Illinois is not a failed state. Rather, Illinois is a state where the political class has failed the citizens.
The political class of Illinois, over the past four or five decades, has built a mountain of debt that suggests the state will be operating in the red through the 21st century. The biggest issue we face as citizens is IL government spending on pensions and benefits.
The key beneficiary of the state budget are the funds for compensation and benefits of public sector employees, accounting for one of every four dollars spent by the state. Everything else, especially programs meeting the interests of citizens, is secondary.
Decades ago, politicians made deals with the public sector unions and signed off on pay and benefits without any public input or approval by citizens/taxpayers. Whether by means of incompetence, corruption or bad decision making, the political class has created a financial disaster. Today, the political class is focused on managing the decline of our state, including the following impact:
The quality of life in our major cities, given crime rates and incompetence of our school systems along with other issues, is a threat to the safety and wellbeing of families and citizens.
The future tax burden to address the many shortfalls of pension and benefit commitments will adversely impact family budgets, reducing the standard of living for all citizens in order to fund government.
We the people of Illinois can no longer fund this scale of government. There is one solution that will best serve the interest of the people of Illinois- Reduce the size of government:
Collapse the thousands of taxing entities by consolidation or ending of such powers,
Workforce reductions to get people off the IL payroll, using outsourcing for services or ending programs,
Restructure the debt burden via bond markets and long-term loans,
Re-write pension and benefits programs for public sector employees with caps on both to keep costs under control in future years.
All of the options noted can be pursued but will be very difficult, especially given the deeply entrenched interests of public sector employees and unions.
Any politician who talks about raising taxes to reduce the debt and spending burden is stuck on stupid.
We the taxpayers are done. We never voted on or agreed to this pension and benefits scheme for public sector employees and their unions, or all the multiple sources of taxation. We never agreed to all this indebtedness, burdening current and future citizens. Allow us to be free citizens able to live our lives without this burden.
Politicians have a choice: continue to manage the decline of our state, or embrace the changes noted plus many more and give us relief.
Note: all facts and data quoted above are derived from sources such as Wirepoints, Illinois Policy Institute, the census bureau and more.
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