41 Comments - City Zen - Thursday, Jan 17, 19 @ 11:52 am: Just quadruple the property taxes on Orchard St. and call it a day. - Perrid - Thursday, Jan 17, 19 @ 11:54 am: It’s good that Chicago isn’t close to going bankrupt (assuming the Detroit figures is the cutoff, which I realize is a gross over simplification), but I wonder about the comparison between Chicago and other large cities. Not being terminal doesn’t mean you’re in good health, to state the obvious. - Merica - Thursday, Jan 17, 19 @ 12:01 pm: I agree that the cities are not comparable. But another difference is that while the City of Detroit was in horrible fiscal shape, the State of Michigan, and other municipal entities were in relatively good shape. Compare that to Chicago, where the City finances are in poor shape (albeit better than the motor city) AND where the State finances are in poor shape, and where multiple municipal governments are close to insolvency. I also would disagree that the city tax base has a lot to give. Fees are extremely high. Transfer taxes are extremely high. Unlike most areas, Chicago car owners pay an annual use fee. City of Chicago residents pay similar high property taxes as the residents of other major cities (about 1.5% of FMV). If they paid Springfield rates (2.7%) on top of high property values, the results would be dramatic. Imagine owning an average 2 bed condo in Ukrainian Village (FMV $500k) paying $650/mo HOA, AND $1,150/mo in RE taxes. It’s not going to happen. Create a statewide tax on crop land. - Anonymous - Thursday, Jan 17, 19 @ 12:13 pm: RMD was so afraid of raising taxes that he went with nickel and diming everything. It’s clear the city needs more revenue to pay for services, and it’s also clear that the fee structure is not working out. The solution, of course, is to eliminate some fees and increase tax revenue overall, whether by expanding the base (taxing things that have not previously been taxed) or increasing the total levy. The next mayor will need to figure that out. - Water Crisis - Thursday, Jan 17, 19 @ 12:17 pm: ==while the City of Detroit was in horrible fiscal shape, the State of Michigan, and other municipal entities were in relatively good shape.== Um, Flint? - Colin O'Scopy - Thursday, Jan 17, 19 @ 12:29 pm: But Rich, this does nothing to further my assertion that “Chicago is going to be another Detroit”. This is horrible news. Another Detroit I tell you… - Out Here In The Middle - Thursday, Jan 17, 19 @ 12:31 pm: “Create a statewide tax on crop land.” I guess I should assume this is snark since Google makes it so easy . . . https://www2.illinois.gov/rev/research/publications/bulletins/Documents/2014/fy-2014-16.pdf - steve - Thursday, Jan 17, 19 @ 12:43 pm: Chicago isn’t Detroit but it could lose another 300,000 people which would put a strain on taxpayers. Can it really keep high schools open that only have 61 kids in them .. total on the West side? https://schoolinfo.cps.edu/schoolprofile/schooldetails.aspx?SchoolId=610245 - Chris - Thursday, Jan 17, 19 @ 1:06 pm: Steve—if Chicago loses another 300k, why would they keep the small schools open? Seems like a good justification for closing some of those schools, where it might be harder now. - NoGifts - Thursday, Jan 17, 19 @ 1:46 pm: To put it another way, $18b/700000 for detroit is $26k per capita, while $42b/2700000 for chicago is $16k per capita. Detroit’s per capita debt was 65% higher than chicago’s. An if I had the energy, I’d be looking into how many jobs each of those cities had at the time too. - Anonymous - Thursday, Jan 17, 19 @ 2:05 pm: Steve, talk to Toni Prekwinkle, she wants to reopen closed schools that we’re vacant and terrible plus give CTU every crazy wish they have. - Smalls - Thursday, Jan 17, 19 @ 2:20 pm: But one big difference is that Detroit was able to reduce its pension liabilities slightly, and also reduce its retiree health care liabilities by 90%, through the bankruptcy. Given the pension protections in Illinois, that would not happen with Chicago. Also keep in mind that Detroit’s population at one time was almost triple what it is currently, at over 1.8 million people. While I don’t think there is any way that Chicago could lose 2/3 of its population, there is no doubt there is a trend of decreasing population that will exacerbate the financial issues. - Anonymous - Thursday, Jan 17, 19 @ 2:24 pm: Smalls, I think that is not totally correct. Michigan’s Constitution does have pension protection like Illinois’, the difference is that Illinois’ doesn’t allow municipal bankruptcy like Michigan. Honestly l, we need municipal bankruptcy in Illinois and we need to eliminate pension protection. - Stuntman Bob's Brother - Thursday, Jan 17, 19 @ 2:40 pm: ==Put another way, Chicago has a population of 2.7 million. Detroit’s population as of the time of its bankruptcy was 700,000== In the 1950’s, Detroit’s population was a little under two million people (Chicago’s peak was about 3.5 million in the same decade). Detroit went bankrupt because wealthier people abandoned it, leaving the people who required a lot of services but couldn’t afford to pay for them. So far, Chicago’s population loss has not had the same demographics as Detroit’s loss. Ideally, Chicago would not lose ANY people, but what it absolutely needs to do, is keep its wealthy population intact, and if possible, draw more of them. How will the next mayor do that? - Dave W - Thursday, Jan 17, 19 @ 2:44 pm: Chicago isn’t Detroit. Yet… - Bourbon Street - Thursday, Jan 17, 19 @ 2:57 pm: Anonymous at 2:24: You may be new to this blog, but the topic of “eliminating pension protection” has been discussed ad nauseum. Ain’t happening here in Illinois for a variety of reasons, not the least of which is the ruling from the Illinois Supreme Court on this very issue. Municipal bankruptcy is not an issue to be taken lightly, either, as it has serious implications for a whole host of creditors, workers, retirees, etc. - Notorious RBG - Thursday, Jan 17, 19 @ 3:03 pm: In another difference from Detroit, Chicago has been seen its high-earning population grow over the long-term, while the low-earning population has decreased. https://www.chicagomag.com/city-life/March-2018/Two-Graphs-Show-Why-the-Chicago-Area-Is-Losing-Population/ - Anonymous - Thursday, Jan 17, 19 @ 3:17 pm: Bourbon, I understand the SC rulings for current workers. But why wouldn’t we want to eliminate pension protection going forward? The pension claise has brought Illinois to it’s knees. Let’s at least remove this for future generations so they can grow and thrive. - Bourbon Street - Thursday, Jan 17, 19 @ 3:27 pm: Anonymous at 3:17: The pension protection clause was a hotly-debated topic at the last Constitutional Convention because, among other things, without it the promise of a pension is merely that: a promise that can be withdrawn. Forcing the legislature to honor its contractual obligations is supposed to encourage fiscal responsibility. Beyond that, I cannot imagine that government agencies could attract and keep quality employees if the employees knew that the pension system into which they paid hard-earned dollars could deny them a pension. - Anonymous - Thursday, Jan 17, 19 @ 3:36 pm: Bourbon, I understand why the pension clause exists. But I also understand that it clearly didn’t work as intended and our state is facing a fiscal disaster. Why would we want to allow this to happen again? All it will take is some politicians to “promise” something to public workers. And in Illinois, that is virtually guaranteed to happen. Life spans are increasing, inflation changes, markets tank, not being able to change a future benefit makes no sense. Virtually no in the world gets that protection. Why? Because it’s insane for anyone to promise to do that without the ability to change. - supplied_demand - Thursday, Jan 17, 19 @ 3:43 pm: == While I don’t think there is any way that Chicago could lose 2/3 of its population, there is no doubt there is a trend of decreasing population that will exacerbate the financial issues. == This is not true, can we please stop spreading this? The population went down from 2000 to 2010 and it has gone up since then. 2000 Census - 2,896,016 2010 Census - 2,695,598 2017 Census - 2,716,450 https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF - PlayK8 - Thursday, Jan 17, 19 @ 3:46 pm: Virtually no in the world gets that protection? https://qz.com/679808/companies-with-defined-benefit-pension-plans/ - Bourbon Street - Thursday, Jan 17, 19 @ 3:57 pm: In my opinion, without a pension protection clause there would be no incentive for a government body to adhere to its promises to its employees. Governments can always find ways to spend money and some decisions are fiscally irresponsible. The burden of even a good faith bad fiscal decision should not fall on an employee or retiree. If voters keep re-electing legislators who cannot act in a fiscally responsible manner, then we are stuck paying the price for those decisions. In a democracy we get the government we deserve, as noted by Joseph de Maistre in 1811 and others. Moreover, private citizens cannot renege on contractual obligations without consequences. The. Same should be true for the government. - Anonymous - Thursday, Jan 17, 19 @ 4:12 pm: But retirement benefits are changed all the time. Including private pension systems and Social Security. - Anonymous - Thursday, Jan 17, 19 @ 4:13 pm: PlayK8, those companies can and do change their retirement benefits. Including pension systems. - TinyDancer(FKASue) - Thursday, Jan 17, 19 @ 4:17 pm: =…$800 million, unfunded retiree healthcare.= This is why every other industrialized country in the world has universal health care. And American businesses are burdened with covering employee healthcare. How is that competitive? - Hieronymus - Thursday, Jan 17, 19 @ 4:20 pm: @Anonymous 3:36pm We can also address your concern with a constitutional amendment mandating the actuarially required normal contribution be made every year. That would prevent a recurrence in the future, too. Otherwise, why do you not also advocate to remove constitutional protections from other creditors, such as vendors and bondholders? - Bourbon Street - Thursday, Jan 17, 19 @ 4:26 pm: Social Security is called the “third rail of politics” for a reason: it’s not going away any time soon because Congress knows how the voters feel about their benefits. Governments and private corporations are two distinct types of entities and so there is no comparison. For example, fiscally irresponsible private corporations don’t last long whereas fiscally irresponsible governments survive. The question is who should bear the brunt of bad governmental fiscal decision-making and part of the answer is “not the employees and retirees who faithfully paid into the pension system.” - Nonbeleiver - Thursday, Jan 17, 19 @ 4:28 pm: - Hieronymus - Thursday, Jan 17, 19 @ 4:20 pm: @Anonymous 3:36pm “We can also address your concern with a constitutional amendment mandating the actuarially required normal contribution be made every year. That would prevent a recurrence in the future, too. Otherwise, why do you not also advocate to remove constitutional protections from other creditors, such as vendors and bondholders?” I often agree with Anonymous but Hieronymous makes a good point. - Shemp - Thursday, Jan 17, 19 @ 4:37 pm: Those in-between estimates are notoriously inaccurate. ===This is not true, can we please stop spreading this? The population went down from 2000 to 2010 and it has gone up since then. 2000 Census - 2,896,016 2010 Census - 2,695,598 2017 Census - 2,716,450 https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF=== - Anonymous - Thursday, Jan 17, 19 @ 4:38 pm: Anonymous - Thursday, Jan 17, 19 @ 4:13 pm And so did the State with Tier 2. - Anonymous - Thursday, Jan 17, 19 @ 4:40 pm: Bourbon, SSA can change retirement ages, annual increases etc. The US Constitution doesn’t protect Social Security. Also, the Feds can literally print money. Huge difference. - Anonymous - Thursday, Jan 17, 19 @ 4:42 pm: Anonymous at 4:38, all it takes is a GA and Governor to promise higher benfits and we have the same problem again. - Shemp - Thursday, Jan 17, 19 @ 4:43 pm: That’s not a good justification. Our fair City has total liabilities of $4,100 per person, including pensions. ===- NoGifts - Thursday, Jan 17, 19 @ 1:46 pm: To put it another way, $18b/700000 for detroit is $26k per capita, while $42b/2700000 for chicago is $16k per capita. Detroit’s per capita debt was 65% higher than chicago’s. An if I had the energy, I’d be looking into how many jobs each of those cities had at the time too=== - Six Degrees of Separation - Thursday, Jan 17, 19 @ 5:00 pm: CMAP’s 2050 forecast optimistically predicts the city’s population breaking 3M by 2040, a number not seen since the 1980 Census where it was barely over at 3.005M. It will be interesting to see how it plays out. - RNUG - Thursday, Jan 17, 19 @ 6:24 pm: == We can also address your concern with a constitutional amendment mandating the actuarially required normal contribution be made every year. == While I agree with the sentiment,such a change to the State Constitution would set up an interesting conflict in current state law. Part of the 1975 IFT decision on funding pensions hinged on the fact that a current General Assembly can not financially obligate future General Assemblies. If such an amendment were adopted, I would be extremely interested to see where the IL SC would land given such a case. - Bourbon Street - Thursday, Jan 17, 19 @ 6:46 pm: Anonymous at 4:40: I never said that Social Security is constitutionally protected. I merely pointed out that Congress won’t touch Social Security benefits. Illinois government pensions, however, are constitutionally protected. Your original question, as I understood it, was why we should continue to give constitutional protection to government pensions. I believe I have made my position clear. - Anonymous - Thursday, Jan 17, 19 @ 6:47 pm: What a ridiculous idea. How about just not have have pensions in the State Constitution like the US government? - wordslinger - Thursday, Jan 17, 19 @ 7:03 pm: –In another difference from Detroit, Chicago has been seen its high-earning population grow over the long-term, while the low-earning population has decreased.– Anyone with a working optic nerve can see that (leaves out the tronc edit board). The link below is a great source for Chicago demographics information. Right off the bat, you’ll see that Chicago’s population is increasing in wealthier, safer neighborhoods, while it is decreasing in poorer neighborhoods where the gun violence takes place. So, maybe “taxes and regulations” aren’t driving Katrina’s Illinois Exodus. Maybe something a little more primal. http://robparal.blogspot.com/ - Anonymous - Thursday, Jan 17, 19 @ 7:43 pm: Taxes and jobs are the main reason people are leaving Illinois. Chicago definitely losing poor African Americans due to violence and horrible schools. - Arthur Sullivan - Friday, Jan 18, 19 @ 7:42 am: I transferred from Chicago to Miami about 5 years ago, and not a day goes by when I don’t miss Chicago. But I don’t see that happening when the likes of Michael Madigan suggest there is no real political desire to fix the finances. Florida, by the way, shows that “low tax” is a red state scam. But that’s another story. Sorry, comments for this post are now closed.