Illinois To Raise Property Taxes To Offset Pension Debt
BREAKING NEWS: Illinois To Raise Property Taxes To Offset Pension Debt
Governor JB Pritzker and lawmakers in Illinois To Raise Property Taxes To Offset Pension Debt.
- The U.S. economy was booming prior to the coronavirus pandemic
- Many states such as Florida, Indiana, Tennessee, Texas, and other Republican-led states were raking in billions in revenues and had billions in surpluses
- However, Illinois was in a financial crisis. Illinois, led by Governor JB Pritzker and Democrat lawmakers have been struggling with finances due to financial mismanagement and financial irresponsibility
- The freshman governor had high expectations by Illinoisans due to being an heir to the Hyatt Hotel family fortune
- However, JB Pritzker turned out to be a dud
In this article, we will discuss and cover the mounting budget deficit and financial mismanagment of Illinois.
Illinois To Raise Property Taxes Due To Financial Crisis Due To COVID-19 Pandemic
JB Pritzker seemed clueless with little to no business experience.
- As soon as the heavyset governor started his first term as governor, he started increasing taxes in more than 20 items
- Not only did Pritzker increased existing taxes, but he created new taxes in an effort to balance the budget
- However, JB Pritzker did not cut spending
- In order for increased taxes to work, you also need to cut spending
- However, the rookie governor raised taxes as well as increased spending
This set a firestorm among Illinoisans.
Pritzker Turned Out To Only Know Raise Taxes
Pritzker doubled the state’s gas tax.
- He also gave lawmakers pay raises
- He did not stop there
- JB Pritzker also gave senior state workers raises totaling more than $200 million when the state is on the verge of bankruptcy
- Pritzker is lobbying in changing the state’s current flat-tax to a progressive-tax system which he calls it the FAIR TAX
- Pritzker is getting much-deserved criticism by taxpayers, businesses, and politicians on the other side of the aisle
In this breaking news article, we will discuss and cover Illinois To Raise Property Taxes To Offset Pension Debt.
Illinois To Raise Property Taxes Due To Major Financial Crisis
Data released by Illinois’ state actuaries reveal the Illinois state’s pension debt shortfall has worsened to a record of $137 billion in 2019. The deficit shortfall plummeted by over $4 billion. This holds true during a time when other states were reaping the great benefits of a robust booming economy.
Dale Elenteny of Gustan Cho Associates has been following the financial crisis of Illinois for quite some time. Dale Elenteny said the following:
The state’s total funded ratio stayed flat at just 40 percent. The data also shows the state’s total pension costs in 2019 exceeded $10 billion, the first time in state history. The poor results highlight the long-term trend of rising shortfalls and increasing costs that have plagued the state for decades. Last year the state shortfall totaled $134 billion and pension costs equaled $9.4 billion. Illinois’ official unfunded liability for the five state funds – for teachers, state workers, university employees, judges, and lawmakers – has grown by $120 billion since 2000, largely the result of some of the nation’s fastest-growing pension benefits. Illinois retirement costs now consume more than 25 percent of the state’s budget, the highest of any state in the nation.
See the chart below:
No money in the world can fix the state’s pension debt crisis.
Is Illinois Headed Towards Bankruptcy?
All these years of financial mismanagement, public corruption, incompetent politicians, and more spending than revenues coming in has taken a toll for Illinois.
- Even the Trump Administration and Senate Majority Leader Mitch O’Connell suggested bankruptcy for Illinois
- JB Pritzker is very stubborn
- He will not listen to reason
- The governor said no to bankruptcy and is seeking a federal bailout from the federal government
- Pritzker even went on to lie and told the Trump Administration that he and the Democrat lawmakers fixed the broken pension system but the coronavirus pandemic destroyed the state’s finances
- This is absolutely not true
- Illinois was in major financial crisis prior to the pandemic and is in the worst financial condition ever after the pandemic
- The pension’s deficit in 2019 has skyrocketed despite taxpayers pouring more money into the pension funds than ever before
- Illinois taxpayers paid over $10.1 billion to pay for state pensions and the debt service on pension obligation bonds
The costs of pensions have been increasing by over 7.0% every year since 2011. This cost is over four times the inflation rate. No tax increases in the world can fix Illinois’ pension debt. It is either pension reform that requires changes to the state constitution or bankruptcy.
See the graph below:
Illinois To Raise Property Taxes Versus Pension Reform
Pritzker and Illinois politicians are adamant about not going through pension reform.
- Democrats think raising taxes will solve the state’s financial mess
- This is not true. No matter how much the state increases taxes, there is no way the pension system will get fixed
- It is beyond repair
- It is a PONZI SCHEME that is about to blow up
- Illinois’ pension debt has increased to an out of control level since 1996
- In 1996, the pension costs were only 2.9% of the state’s general funds
However, in 2019, the pension costs are over 25% percent of the state’s $40 billion in general funds.
See the graph below:
Illinois Tops As The Worst Pension Debt State
Illinois surpasses any other state in the nation as having the worst pension debt. No other state in the nation is close to the pension debt Illinois has. The state’s pension system has been broken for decades. Every year, the state pension debts keeps on getting worse.
Jammi Cash of Gustan Cho Associates has been studying the financial crisis in Illinois. Jammi Cash said the following:
JP Morgan recently analyzed pension costs across all states and found no other state has the pension burden that Illinois has. Illinois’ quarter-of-budget consumed by retirements is even worse when compared to its neighbors. Kentucky’s retirement costs consume 13 percent of its budget – half of Illinois’ level. Indiana is at 6 percent. And Iowa’s costs are just 4 percent of the budget, six times smaller than in Illinois.
See the chart below:
Pritzker’s Solution To Solving The Financial Crisis
Illinois remains the highest taxed state in the United States. The state is also the state with the most debt and in financial crisis. Illinois was in horrible financial shape prior to the coronavirus pandemic. Now with the loss of tax revenues due to the pandemic, the state is in worst financial shape than ever. Pritzker and the democrat controlled legislature have been hoping in getting a federal bailout. However, Senate Majority Leader Mitch O’Connell said there is no way in the world the U.S. government will be bailing out financially mismanaged states. Chicago Mayor Lori Lightfoot did not waste any time in announcing the city will most likely raise property taxes to cover the city’s $700 million budget shortfall. JB Pritzker thinks changing the current flat-tax to a progressive tax system will be the answer to Illinois’ financial crisis and the solution to avoid bankruptcy. The governor’s FAIR TAX is changing the flat-tax to a progressive tax system where it penalizes the rich. The more money you make, the more taxes you pay. Due to the economic setback due to the coronavirus pandemic, many business owners had their worst year ever due to loss of revenues. Many businesses cannot reopen due to the massive financial hit they took from loss of revenues. Others have either gone bankrupt or are going to go bankrupt. Asked whether he plans on delaying the progressive tax, Pritzker said absolutely not. Pritzker said right now is the time the state needs the progressive tax more than ever. He said higher wage earners are more than eager to pay their fair share and pay more taxes. This is absolutely not the case. More and more businesses and individual taxpayers are planning in leaving the state to other lower-taxed states. Pritzker, politicians, and unions are directing the blame of the pension crisis on the underfunding of pensions. The pension fund has been mismanaged for over three decades. Taxpayers did their part in funding the pension fund but the state has mismanaged the pension fund that is now broken beyond repair. Illinois pension fund is hands down the worst managed out of any pension system in the U.S.
See the chart below:
Solution To Fix Illinois Financial Crisis
Illinois has a major financial crisis. The state has been in financial chaos for decades. However, they can no longer operate like a ponzi scheme as they have been by robbing Peter to rob Paul. The state has a world reputation for having corrupt politicians. Four Illinois governors were arrested, indicted, convicted, and served prison time for corruption. JB Pritzker was under federal criminal investigation in his first year in office for property tax fraud. Dozens of Illinois politicians have been investigated, arrested, indicted, and/or convicted for fraud in the past year. The state needs competent and honest politicians. Corruption needs to get eliminated. The state needs to change its laws and institute term limits. Too many politicians like Chicago Alderman Edward Burke and House Speaker Michael Madigan have been in office for decades and are currently being investigated by the FBI for corruption. The state needs a competent honest governor who can lead by example and run the state like a business. Do not spend money you do not have. Cut spending. Cut taxes and try to recruit new businesses and individual taxpayers to Illinois. Pritzker’s progressive tax will devastate the state and cause a mass exodus of taxpayers and businesses. Illinois’ combined state and local taxes are the third highest in the Nation. Home values keep on depreciating due to high property taxes. Illinois has been ranked as the worst state to own a property in the country. This is scaring real estate investors away. Illinois has the country’s second-worst exodus of taxpayers and businesses. Illinois politicians need to get the mentality that raising taxes, especially property taxes, is not the solution to solving the financial irresponsibility of politicians, especially the governor.
Fixing The State’s Broken Pension System
No matter how much Illinois increases taxes, it will not fix the state’s broken pension system. Every year the pension debt keeps on getting larger. The state’s five pension systems are only 40% funded. However, the governor and state lawmakers are against this. To restructure and reform the state’s pension system, state lawmakers need to change the constitution. Pritzker said he will not do this. The other option the state has is bankruptcy. JB Pritzker should not bank on a federal bailout. It will not happen. In the meantime, Illinoisans are getting property tax increases year after year. The state remains one of the highest taxed states in the nation. Countless businesses and taxpayers are fleeing the state. Fewer revenues are being collected. More taxes are being put in place. It is a losing proposition. Illinois needs a competent strong honest governor and new lawmakers.
See the chart below:
Pritzker seems hopeful that the federal government will be bailing Illinois is out. Pritzker and lawmakers do not seem to be panicking. The state is one step away from bankruptcy. Illinois was one of the first states to close due to the coronavirus pandemic. The state is the last state to reopen. The state has not reopened yet. JB Pritzker is becoming more and more hated as time passes. By keeping businesses closed, it is hurting business owners and workers. Many Illinois businesses are likely to remain closed permanently and go bankrupt. The longer workers remained furloughed, the higher the chances their unemployment will remain permanently. Illinois is one of the states with the highest mortgage forbearance rates in the nation. Moody’s Investors Service, using more realistic assumptions, calculated Illinois’ pension debts at $241 billion in 2018.
See the chart below:
July 1, 2020 - 8 min read