“What we need is to work in moderation, not in the extreme.”

-Illinois House Speaker Michael Madigan

 

“Yeah my blood’s so mad feels like coagulating.”

-Barry McGuire, Eve of Destruction

 

By: Mark Glennon*

 

They’re sprouting. Tax protest and revolt groups, long predictable in Illinois, are popping up. Articles today in the Northwest Herald and Illinois News Network describe some of them, perhaps the most notable being Illinois Tax Revolution. Others are under discussion or in formation. I’ve heard from them here.

 

Most are focused on property taxes, as they should be, because rates in many Chicago suburbs have reached levels that can only be described as suicidal and confiscatory. The most widely read article on this site details effective property tax rates in Chicago’s south suburbs, which average over five percent. Dozens of suburbs in other areas are over three or four percent, which we listed in a separate article. Almost all are going up to feed growing pension contributions with no end in sight.

 

Most Illinois politicians and media remain in denial of that insanity. The press has ignored what’s happened in the south suburbs. But those who pay understand. Perhaps the biggest obstacle to organized tax protesters is they are too late in many cases. Once rates exceed three or four percent, a death spiral ensues. The south suburbs are doomed by that death spiral. A Gallup poll two years ago said over half of Illinoisans would leave if they could. It’s probably worse today.

 

It’s too early to say what direction these efforts will take or what success they will have, but there’s one central, undeniable reality they, and all of us, must face. Debate what the answers should be, but suck it up and deal with this fact: Our model of government in Illinois is broken. We simply aren’t generating the jobs, revenue and growth we need to keep the promises government has made. Excessive property taxes are the most conspicuous element in that broken system.

 

Fueling the revolution is ever growing anger over the control of state government by Cook County Democrats, widely despised outside the county, and their subservience to public unions. Committed to that mantra of “moderation” constantly repeated by Speaker Madigan, they remain indifferent to the plain truth that drastic, extreme, radical remedies are long overdue.

 

And, now, the Illinois Supreme Court has reinforced the perception that it is a rogue court. Yesterday’s ruling striking mapping reform from the November ballot, cast along party lines, will be the last straw for many. It’s legitimacy has cracked.

 

Don’t underestimate the historical importance and overwhelming size of the challenges at hand in Illinois’ state and local fiscal crises.

 

*Mark Glennon is founder of WirePoints. Opinions expressed are his own.

 

 

 

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crabcakes
4 years ago

Somebody please explain why Rauner was fighting so hard not have the TRS pensions rate of return lowered from 7.5% to 7%? Why isn’t he using this to his political advantage, as devastating as it is, a 7% rate of return is still wildly optimistic? He should be using his office to launch a PR campaign and inform the public of the true pension debit and expose whats dished out to the public(in the Trib, Suntimes, Crains, etc) is a joke. Don’t get it

nixit71
4 years ago
Reply to  Mark Glennon

While I agree fundamentally with the drain principle, I view pensions as part of the entire compensation package. If pension costs consume too much in overall compensation, then freeze salaries and/or cut health benefits in order to fund those pensions. The answer is in a 2-tiered salary/benefits system. Tier 2 employees should have a higher salary and/or better health benefits because their pension benefits consume less compensation dollars. Tier 1 employees should have salaries frozen (or maybe tied to inflation but no more) for a number of years until their deferred compensation deficit catches up to their current compensation. Enact… Read more »

crabcakes
4 years ago
Reply to  Mark Glennon

I guess why I’m most disappointed with Rauner is he never really makes the case to the tax payer. He talks about bankruptcy for CPS for example but then never puts out any figures to back it up? with regard to TRA pension mess He could simply press the point that the extra $400 mil taxpayers will have to belly-up for TRA pension is only the tip of the iceberg. He could use the TRA pension as an example and put out his own projection on what astronomical increases would be required with a 6.5%, 6%, 5.5%…2.2% (2.2% is my… Read more »

bob oriole park
4 years ago
Reply to  Mark Glennon

Agreed. One of the best examples was his veto of the Police/Fire pension bill that became law after his veto got overriden. I wonder if even read it, because if he did, he totally failed to comunicate the fact it mandates automatic, unlimited property taxes starting in 2020.

nixit71
4 years ago
Reply to  crabcakes

The state is under no obligation to raise taxes to fund pensions. If pension costs are going to consume an extra $400M, then cut $400M elsewhere from the budget. Let the Legislature decide what gets cut. But I say fund the pensions. Tell all those charitable orgs that rely on state dollars to hit up the pension funds for more money. It’s not my fault they’ve got priority. It’s time to call that bluff. Fund the pensions, but don’t raise taxes one dime. Legislators made the decision years and years ago to offer and enhance pension benefits without properly funding… Read more »

J.A. Herzrent
4 years ago
Reply to  nixit71

Once a labor contract expires, reduce current Tier 1 salaries and benefits. Local school boards should offer less and bargain to impasse. There’ll be strikes or work stoppages. Not legal. Grounds for terminating those who don’t show up. These workers can’t be more essential than air traffic controllers, can they? They probably have mortgages and credit card bills to pay. Further advantage would be to reduce the average pay upon which pensions are based, thus reducing pensions. AND IF the pension board can be put in place with a full slate, start cutting back pensions to preserve the pension trust… Read more »

J.A. Herzrent
4 years ago
Reply to  Mark Glennon

The continuing appropriation for pension payments will surely divert funds from other necessary government activities that don’t have continuing appropriation protection. I question the constitutionality of contining appropriations because they subvert governmental sovereignty. A legislature in year X is not supposed to be able to tie the hands of a subsequent legislature in year X+3. Continuing appropriations seem to be used for public debt and pensions. How long will it be before these payments (supposedly already appropriated) will consume all the revenue? (Not that the IL Sup Ct would approach the issue with an open mind or a practical logic.)

XOF2
4 years ago
Reply to  crabcakes

Do you have any proof Rauner was mad because the discount rate was lowered 1/2%??

I thought Rauner was mad because the meeting was held very quickly , with only 2 hours notice…

And I would guess that Rauner wanted the discount rate of TRS sers and surs lowered to 3%

Yes, lowered to 3% from 7.5% , for all TRS sers and surs pension funds,
Since 3% is more truthful of a discount rate.

XOF2
4 years ago
Reply to  Mark Glennon

Why doesn’t wire points ask Bruce,,?
He should speak with you….
And then you can tell us…

You are spot on these pension issues.
Tell him he needs to communicate better on this
and
the other issues….
That Bruce needs to Explain some key details and facts with us , ( like guaranteed funding clause in fire and police pensions)

Mike
4 years ago

Dan Proft’s interview of Michael Madigan’s spokesman Steve Brown was posted August 14, 2016 on YouTube.

Ideas for additional sources of revenue included a progressive income tax and service taxes.

http://www.youtube.com/watch?v=Yyp1EqxxoXk
http://www.youtube.com/watch?v=xBuxOe4peac
http://www.youtube.com/watch?v=KhLKRaey82Y
http://www.youtube.com/watch?v=Wavncd34N-A
http://www.youtube.com/watch?v=eTd87URUi8k

Rick
4 years ago

Or Durbin will become governor, he will then get the fed to bail out the whole 111 billion. The structure of nothing will change, the fed bailout will simply buy another 30 years of the next “Madigan” using the government sector economy as a special class protected from diminishment and the market forces everyone else has to live with.

4 years ago
Reply to  Rick

Durbin only runs for Governor if the Dems fail to keep the Senate. Right now, Chris Kennedy is the choice.

Bross
4 years ago

Property taxes are only part of the equation. What happens when the State tries to fix the yearly budget shortfall. Currently $39B spend with $31B of revenues. Even if we cut half the difference, there is still a big increase to get to $34B. Then we have to make up the $10B in backlog. Another increase of taxes. Then it is only a matter of time before the pension rate of return is lowered and pension contributions will soar. Another tax increase. It shouldn’t be hard to calculate what income tax increase is required to meet the huge gap. 6%?… Read more »

Adam
4 years ago
Reply to  Bross

People will keep leaving, but all that does after a certain amount leave is make paying the pensions impossible, which they most likely already are now anyway. Taxes can only go up so high, and only so many cuts can be made. In the end leaving is simply not an option for everyone, but the pensions running out of money will happen for certain in time as they are now. Math wins out in the end, and taxes cannot be raised forever. The pensions are doomed.

Adam
4 years ago
Reply to  Adam

Please respond to my comment above Mark. Tell me what you think of what I said.

Adam
4 years ago
Reply to  Adam

Join the discussion

J.A. Herzrent
4 years ago
Reply to  Adam

Pension clawbacks should begin now via a bankruptcy process. Otherwise, those now retired or soon to retire will empty out the pension trusts in about ten years. The funds that have been accumulated for all employees should now be allocated fairly to all employees. Pension millionaires will still get the bigger share than younger workers but at 40% (or so) funding level, the millionaires would help to share in the pain of lower pensions and reduced (or more expensive) health care.

nixit71
4 years ago
Reply to  Bross

Here are my predictions for Rauner’s term: – Income tax hike to 4.75% after the election: We all know it’s coming. Only Rauner’s presence will keep it below 5%. This will be considered a “win”. Retirement income will remain tax free as no one has the guts to piss off the Boomers. – Pension cost shift to local districts: That’s the only way to keep the tax rate below 5% and get the liability going-forward off the state’s books. The localities will suffer big time and this will do nothing to keep property taxes in check. Logically, a massive Tier… Read more »