41 Comments - Tsavo - Friday, Apr 4, 14 @ 9:57 am: http://seiu73.org/2013/11/08/legislators-pass-park-district-pension-reform/ Rich, What am I missing here? SEIU73 supports this bill, but is against the bill that passed for Chicago Park District (see link) pension changes because it changed the COLA for retirees. This current bill changes the COLA for retirees so why are they supporting it? - A guy... - Friday, Apr 4, 14 @ 9:59 am: I’ve been saying for months the people in Voterland are very resentful of property taxes that were high and increasing when their home values were decreasing. They viewed it as repressing and unfair. They are angry. They’ve let their local reps know they’re angry. The longest line in Springfield will be the one to the Speakers office to get permission to vote against this “dog”. If they don’t get permission, they will do the unspeakable…they’ll oppose the speaker. And he knows it. Thus, no vote. - wordslinger - Friday, Apr 4, 14 @ 9:59 am: You wonder why Emanuel didn’t try this move last year. It’s a heavy lift in an election year with income taxes already in play. Did he think a half billion or so was going to drop out of the sky for him? - Rich Miller - Friday, Apr 4, 14 @ 10:03 am: ===This current bill changes the COLA for retirees so why are they supporting it? === Because they’re worried that there will be no pension at all if they don’t do something. It’s in one of the stories I read today, but now I can’t find it. - Rich Miller - Friday, Apr 4, 14 @ 10:04 am: ===You wonder why Emanuel didn’t try this move last year.=== Because they couldn’t even pass a state reform plan last year. - Walker - Friday, Apr 4, 14 @ 10:06 am: Ask any homeowner what they pay in taxes, and they will tell you exactly what their property tax bill is, while being clueless what they paid the state in income taxes. They want all taxes to go down, but if you’re figuring out a way to get more state revenue, then the strategy of being seen as “lowering” property tax, while “increasing” income tax, is by far the safest bet. You got to the core of it, Rich. - Small Town Liberal - Friday, Apr 4, 14 @ 10:07 am: - You wonder why Emanuel didn’t try this move last year. - Wasn’t the plan last year to get permission to skip the payment? - Reformed Public Servant - Friday, Apr 4, 14 @ 10:15 am: ===You wonder why Emanuel didn’t try this move last year.=== Because his friend Bruce is now running against Quinn, and this is how Rahm can “silently” help Bruce… outwardly work for team D, but internally sabatoge it! - GA Watcher - Friday, Apr 4, 14 @ 10:21 am: Why should the Republicans care if Chicago wants to raise property taxes to pay for this latest pension deal? It’s not as if there are many Republican legislators representing the City for which this would be a tough vote. You could protect them by making sure they vote no. If Mayor Emanuel and the 28 unions that negotiated the bill want to increase property taxes on Chicago property owners, let them live with the consequences. - austinman - Friday, Apr 4, 14 @ 10:23 am: I agree with you Reformed Public Servant. This is great way to help Bruce out. - Chicago Publius - Friday, Apr 4, 14 @ 10:29 am: Walker is right that voters are sensitive to property taxes. They get the damned bill twice a year, and if they’re not escrowing, they they have to cut a big check twice a year. in contrast, sales taxes are stealthy. The total amount of sales taxes paid in a year is invisible, unless we keep a running tally every time we buy something — and who the hey does that? And the state income tax, while visible, is mostly over-shadowed by the federal income tax. So, compared to the other taxes, voters CARE about property taxes because those taxes are highly visible, they punch you in a big way twice a year, and they seem very high. The other reason voters get hetted up about property taxes is that those taxes aren’t based on an activity where you are getting something or doing something. The sales tax is paid after you got something in your hand. The income tax is paid after you got money in your hand. But when you pay your property tax, it’s not as if you’ve GOT anything new or DONE anything new to compensate for the tax. In other words, with the property tax, the government isn’t taking a cut of a transaction that gets you something new (the sales tax) or a cut of a transaction that gets you more money (the income tax). Rather, the government is just taking money out of your pocket for something that you’ve already paid for, at a cumulative amount that has no bearing on the value of the thing taxed. (Remember: the total amount of the tax levy is not based on the value of the homes; its’s based on what the local government’s budgetary needs.) The bottom line is this: from the perspective of the voter, the tax on real-estate is just as irritating as a “refrigerator tax.” You already own one, you’ve already paid a tax or a fee when you got it, and now the government wants to extract more money out of you each year simply because your name is on the title. - SAP - Friday, Apr 4, 14 @ 10:31 am: As a long-time resident of Sangamon County, I would love to have property tax rates like the City of Chicago. Would more than offset their higher sales taxes. - Anonymous - Friday, Apr 4, 14 @ 10:35 am: Why do pensions have to be funded by property taxes? How about using some TIF money? Or is that part of the deal with the building trades? If you throw your public sector members under the bus, we’ll leave the TIF money alone so your private sector members benefit. Hardly anything is less popular than the property tax. Legislators should look for alternative sources of revenue and preserve the current benefit levels. . - Been There - Friday, Apr 4, 14 @ 10:36 am: ===Did he think a half billion or so was going to drop out of the sky for him? ==== If the gaming bill ever passes and Chicago gets to keep their profits, then, maybe not a half billion but at least $300 mil per year in revenue would keep those property tax increases a lot, lot lower. - NotPurple - Friday, Apr 4, 14 @ 10:36 am: Is Local 73 really attempting to say that they carry as much weight politically as CTU does? In the Mitchell/Travis race, CTU spent well over $100K in their attempt to take out Mitchell. SEIU Local 73 spent $5k on Travis, and interestingly spent another $8k in in-kinds to Mitchell. Throw in the IFT/IEA and AFSCME, and Local 73 contributed $5K to the $350k or more that the other labor folks spent. So Local 73 is attempting to say that because they spent 3% of what CTU did against Mitchell, that legislators should believe that Local 73 will have their back against CTU and AFSCME? And, really? How are they going to justify to their members backing someone explicitly because they voted for Pension Theft? And, before someone talks about the other money that SEIU (State Council, SEIU Healthcare) spent… I don’t see SEIU Illinois or SEIU Healthcare going all in to protect someone because they voted FOR a bad pension bill. - Chicago Publius - Friday, Apr 4, 14 @ 10:40 am: Rahm’s strategy in tying pension reform to property taxes could easily backfire. He could have easily fashioned a bill that would have let Chicago pay its pension contribution from any source whatsoever (e.g., home-rule sales taxes, Chicago’s famous soda-pop tax, etc.), perhaps even expanding the City’s authority over local taxes. Instead, he’s trying to use pension reform as a way to undermine voter support for public employees, their unions, and their pensions. His thinking is that when voters see, on their tax bill, how much of their higher real-estate taxes are going to pensions, the voters would be less inclined to support the teachers, the firefighters, the police officers, etc. It’s a strategy that is too cute by half, and by trying to stick it to the unions, he’s put himself in a bit of a corner. - No Buddies - Friday, Apr 4, 14 @ 10:48 am: United Center was available to DePaul free of charge, but lets build a private college a basketball arena with TIF funds. Of course, great idea. - Rod - Friday, Apr 4, 14 @ 10:52 am: Which is it Rich, is Rep Zalewski stupid or is he straight up lying? He is quoted in one of your clips as saying: “Right now, a lot of people are concerned about the property tax part of the bill. It all came up all of a sudden, and a lot of us were thrown off.” On January 30, Hal Dardick reported in the Tribune that, “Mayor Rahm Emanuel recently met with the four leaders of the Illinois General Assembly to discuss major shortfalls in the city’s employee pension funds that could blow a huge hole in next year’s city and Chicago Public Schools budgets.” The article goes on to state that Christine Radogno did not provide details related to this meeting and then the Hal Dardick writes: “In September, the Tribune reported that a plan put forward by the mayor’s chief Springfield ally, Senate President John Cullerton, D-Chicago, could provide a hint. The measure would require a series of small city property tax increases starting in 2018 — three years into what would be Emanuel’s second term as mayor. It also would delay the need for big increases in city pension payments to 2022, three years into what would be Emanuel’s third term, if he decided to serve that long and was able to win re-election.” Clearly a property tax increase has been discussed as part of the pension deal for a while now even though the details have changed. So the more I listen or read what Rep Zalewski says the less and less credibility he has. Or is he just stupid? - 47th Ward - Friday, Apr 4, 14 @ 10:57 am: ===United Center was available to DePaul free of charge=== You might be the most gullible person alive if you believe that. And according to the most recent news, the arena project is getting exactly 0 ITF dollars. No wonder you don’t have any friends. - AnonymousOne - Friday, Apr 4, 14 @ 11:04 am: Maybe property taxes could be lower and not so resented (I resent them) if Illinois funded it’s schools as other states do with state funds. I believe we are 48th or 49th in state funding of schools. And by the way, those taxes fund your libraries, park districts, schools. I understand that you might resent paying for those things if you don’t use them. Seems everyone is “in” for passing school referendums and such when their kids are in school, not at all when their kids are finished. Funny thing. But taxing services, scrutinizing corporate welfare might help with revenue. They’re not so willing to look at those things for some reason. There has to be immeasurable corruption and skimming going on amongst our elected for us to be so short. Where does the money go? It’s at the top, folks, not amongst the peon working class. - Anonymous - Friday, Apr 4, 14 @ 11:05 am: “===This current bill changes the COLA for retirees so why are they supporting it? ===” I think SEIU is not supporting the plan, but has stated that they dont oppose this plan. No real differance but they stated they are not supporting it because of the changes to those that are already retired. - Illinois taxpayer - Friday, Apr 4, 14 @ 11:17 am: So we have a tax revolt on the one hand, and unions saying “not one dime in benefit reductions” on the other. Looks like the classic irresistible force meeting an immovable object. The only outcome can be insolvency for the pension funds. - Rich Miller - Friday, Apr 4, 14 @ 11:19 am: ===classic irresistible force meeting an immovable object=== The immovable object wasn’t so immovable a few months ago when state pension reform was passed. - dupage dan - Friday, Apr 4, 14 @ 11:38 am: The funds have to come from somewhere. It really seems to be a game of the pea under which of 3 shells. If your property isn’t taxed, your income is. I know inequities exist and it is important to make it logical and fair. The problem is, as I said before, the system exists now, either due to deliberate action or thru years of tweaking. If the former, good luch changing it - that constituency is powerful. If the latter, it will still be hard because folks are used to the system and have found ways to get around it or benefit from it. Emanuel is in a tough spot - he has telegraphed his dislike of Quinn and will find it hard to push his agenda. He can’t change the funding system - he can only ask for the tax increase. Bummer. - Judgment Day - Friday, Apr 4, 14 @ 11:52 am: Property taxes keep going up, because bluntly, (a) that’s where the value is, and (b) the tax revenue structure ’smooths out’ better. With heavier reliance on (certainly) income taxes, but also sales tax, any ’swings’ in collections are going to be relatively immediate, where changes in property taxes are going to be spread out over a period of time. Remember, property tax calculations use a 3 year running average (Ex.: 2013 values, payable 2014 tax bills are based upon a 3 year weighted average of 2012, 2011, & 2010 property sales data). If you had a bunch of pol’s who decided to move to ‘zero out’ property taxes (say, just for schools), and move to 100% alternative funding by sales/income taxes, wow, some serious blowback would occur. There was a study by IL DOR quite a few years ago (back in early 90’s, if memory serves me correctly) that got quickly buried once they started to see the results of funding the schools using only sales and income taxes. Very ugly - today it would be far worse. And the (projected) swing effects from economic performance were frightening. There’s real reasons property taxes are the preferred method of funding. - PMcP - Friday, Apr 4, 14 @ 12:23 pm: @Judgment Day You’re absolutely right. Part of California’s boom and bust budgeting issues was their heavy reliance on income taxes. I don’t like the idea of a property tax since no one really owns anything with it but it really is the best way to fund government. - Chicago Publius - Friday, Apr 4, 14 @ 12:40 pm: One of the problems with Rahm’s approach to pension reform and the state’s approach as well) is that it’s based on the simple-minded notion that the only way to increase revenue for pension contributions is by hiking taxes. The Emmanuel, Quinn, and Madigan proposals fail to take into account the fact that there are other revenue streams available — not just tax hikes. For example, Canada straightened out some of its pension mess by giving some of its public pension funds some part of the legal or equitable title to public airports. With some creative thought and financing, Chicago could find a way for its public pensions to get some revenue in a similar way — that is, by giving them some legal or equitable claim to some of the City’s hard or soft assets. The other reality is that the City could find new money, without raising taxes, by closing down TIF loopholes. A study came out today that argues, pretty persusively, that the money lost by Chicago because of TIFs is equal to or greater than the sums that the City should have been contributing to its public pensions. Here’s a link to the study: http://www.suntimes.com/csp/cms/sites/STM/dt.common.streams.StreamServer.cls?STREAMOID=kUAXrdZw5LGegvUdej_jylYzXkgPZ1pSHs6SQbjaOvw7l_OBazUIuJH0NidK_8JAjMpqdV2Mso4mH6beQ6T6p6cn$IfHvVpaPD23r0DuAcZaTfjnUETyN4ze2Kxdkdy8&CONTENTTYPE=application/pdf&CONTENTDISPOSITION=Skuls-CST-040414.pdf The bottom line is this: Rahm can try to use higher real-estate taxes as a way to stir up voter anger against public employees and their unions, or he can seek out creative ways to solve the problem. He’s chosen the former appraoch — and right now, it doesn’t seem to be working. - Andrew Szakmary - Friday, Apr 4, 14 @ 12:40 pm: 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. (Source: Illinois Constitution.) I am confused. Isn’t Chicago by definition a unit of local government? If it is, then any reduction in pension benefits for current employees or retirees is a contractual violation that is expressly prohibited. Yet, there is not a single legislator who appears to be troubled by the proposed pension cuts, but a great many are troubled by property tax increases that are perfectly legal and constitutional. Thank God we have judicial review. I suspect it is only because of this that, as Churchill once said, you can depend on Americans to do the right thing (but only after all the alternatives have been exhausted). - Will Caskey - Friday, Apr 4, 14 @ 12:48 pm: Of course SEIU 73 is assuring legislators they’ll back yes votes. The next primary is two years off. No one is going to remember or care about SEIU’s activity relative to this bill by then. On the other hand if the tax vote goes to the city council then Emanuel comes up with 26 votes and then SEIU is on the hook for defending aldermen allied with the mayor in 2015. So of course they want the tax issue dealt with in Springfield too. - PMcP - Friday, Apr 4, 14 @ 12:51 pm: @chicago Publius That’s actually a really interesting and novel idea. They already tried to privatize Midway but giving equitable stakes to entities with debt claims that produce a return may solve part of that problem since the earnings in business-type enterprises can’t be diverted to outside funding sources otherwise… That’s a really interesting idea… - Rich Miller - Friday, Apr 4, 14 @ 12:52 pm: ===The other reality is that the City could find new money, without raising taxes, by closing down TIF loopholes=== That’s true, but then what do you do about the economic development hole you’ve created? Somebody’s gotta pay the taxes, man. - A guy... - Friday, Apr 4, 14 @ 1:00 pm: TIF is just about the only economic tool left in the toolbox for economic development. There just isn’t any other public money for development laying around. The abuse of TIFs is a problem. There are places that will develop all on their own with private capital and without public partnership. They don’t need TIFs. Other places the TIF isn’t close to enough to encourage private risk. They need to be careful and strategic where these zones are located- either to save an area that’s slipping or encourage a positive wave that’s developing on it’s own and can use a pump of adrenaline. - Yellow Dog Democrat - Friday, Apr 4, 14 @ 1:10 pm: @GA: Republicans and down staters should care because the bulk of the state’s commerce is within Chicago’s city limits. Chicago is the economic engine not just for Illinois, but the Midwest, and businesses pay a disproportionate property tax rate in Chicago already. You are slowly strangling the Goose. - AnonymousOne - Friday, Apr 4, 14 @ 1:14 pm: For all that was paid for with pension money, how would/should those things have been paid for? Tax revenue. - Upon Further Review - Friday, Apr 4, 14 @ 1:50 pm: @Rich Miller: With respect, I am beginning to question the utility of the politicians doing economic development planning for the rest of us peons. I do not think that their track record for making sound investments is that great except for rewarding themselves and their cronies in the construction industry. Millennium Park is a magnificent tourist attraction, but nobody can argue that if it were a private development rather than a public one that the price tag would not have been much less. Please accept my apologies for my cynicism. I sat through a public meeting where minority contractors were arguing about who deserved to get a bigger slice of the economic pie for constructing the new $215 million dollar Malcolm X College. The old college opened in 1971 (built for $27 million), but nobody questions why it is suddenly obsolete. - Judgment Day - Friday, Apr 4, 14 @ 1:51 pm: “I don’t like the idea of a property tax since no one really owns anything with it but it really is the best way to fund government.” —– Actually, IMO, it’s a really bad way to fund government (at least in IL). Couple of reasons. First, relying on property taxes enshrines the Status Quo - The way things have always been done. If you don’t believe it, take a serious look at when the STRUCTURAL design of IL property taxes as exists today was first created - it’s actually the Revenue Act of 1919, as Amended (no kidding). Now, it’s been tweaked (& tweaked & tweaked & tweaked, etc.), and operational changes made to the statutes, but the basic STRUCTURAL design of the entire process goes back to 1919. Now, you may not think it’s a big deal, but when you are doing the work today, imagine if you had to only use business practices that were vetted back in 1919 (unless tweaked….). What happens if there are no local newspapers to handle legal publications? (many newspaper publications are required by law). What happens if USPS goes out of business? (got to mail all those various notifications out). Yes, property taxes raises a lot of revenue. But it’s a ridiculously arcane process. Too much of the time it operates like one of these Domino toppling contests (http://www.youtube.com/watch?v=sTL0lvwyVpo). And the process is completely unexplainable to the average taxpayer. And try explaining to taxpayers why the value of their homes have decreased, and their property taxes care still increasing. And with the exception of some Chicagoland neighborhoods, but virtually anywhere else in Illinois, it’s at best a stagnant marketplace. IMO, Rahm’s property tax increase for the benefit of funding retirement benefits for public sector employees is not going to sell well with the rest of the citizens. Something to think about - Last time I checked (couple of months ago), the retirement funding issues for the City of Chicago were not unique. These same issues exist for both Cook County government and Cook County Forest Preserve. I actually believe the funding percentages for all of the different Cook County retirement systems were all in the low/mid 40% range. Something to think about (tax bases are larger, so there’s some offset). This just might be the start….. - Harry - Friday, Apr 4, 14 @ 2:03 pm: Chicago Publius–that doesn’t create value, it just shifts it around. If assets like that are running a surplus it is already going somewhere, moving it to pensions just leaves a hole behind. Yellow Dog Democrat–in your dreams, maybe. The Chicago metro area is the things you say, not the City, itself. The right question is how would a weaker Chicago affect the region as a whole, and that has been argued many times, always shedding more heat than light. - Upon Further Review - Friday, Apr 4, 14 @ 2:04 pm: @Judgment Day: You hit the target right in the bull’s eye! Once I was reading some old newspapers on microfilm and the complaints about property assessments and taxes from the Roaring Twenties would be nearly identical to the present day. The only significant change was that a multi-member Board of Assessors for Cook County has been replaced with a single Assessor. - Chicago Publius - Friday, Apr 4, 14 @ 2:46 pm: Harry at Friday, Apr 4, 14 @ 2:03 pm: “Chicago Publius–that doesn’t create value, it just shifts it around. If assets like that are running a surplus it is already going somewhere, moving it to pensions just leaves a hole behind.” Your response doesn’t take into account how public finance really works. The revenue stream associated with such assets as Midway, O’Hare, Millenium Park, the proposed Chicago Casino, the proposed Illiana, the proposed privatization of the lotttery, etc. goes to private investors. If local pension funds were to receive all or a portion of the legal or equitable title to those assets, then some of the revenue stream would belong to them, and they could manage that asset as owners or “shareholders.” As I said, take a look at how they saved public pensions in Canada by linking them to public airports. The general advantage to this approach is that it opens up the door to conversations that aren’t always about tax increases, and would let public pensions share in the wealth that now flows to private investors. - AnonymousOne - Friday, Apr 4, 14 @ 2:55 pm: I asked earlier where the money has gone since everyone feels they’re paying so much. Read: http://pando.com/2014/04/04/revealed-rahm-emanuel-cuts-public-pensions-diverts-money-to-benefit-campaign-donors/ - PMcP - Friday, Apr 4, 14 @ 4:07 pm: @ Judgment Day I agree that it’s a anachronistic way of funding government when, with current technology, we’re better able to apply costs to those who use the services. However, as opposed to income taxes, property taxes are much more consistent source of revenue year-over-year and doesn’t have to tendency to have vast fluctuations like you have with income taxes. Again, I agree there is a better way, but for a budgeting/funding mechanism, property taxes are really the best way to go. Sorry, comments for this post are now closed.