October 4, 2019
Chicago and Illinois don’t have enough taxpayers to pay for all this
Chicago teachers want better pay and working conditions. Mayor Lori Lightfoot has made a generous contract offer, yet the Chicago Teachers Union is threatening to strike. That’s but one sequence of current events in this city’s, this state’s, long-running series of public finance crises. What’s the fuller picture? Well, go back decades to when politicians in Chicago and Springfield began skimping on payments to government retirement systems.
Illinois suffers many of these fiscal catastrophes — in its school districts, cities, townships, counties and of course state government. Yet there’s only one set of taxpayers to address the layers of distress — the people who live here now.
That’s why whatever contract agreement Lightfoot secures with the CTU cannot create even more draconian costs, even more debt: Each Chicago taxpayer who helps fund schools and teacher pensions, mainly through property taxes, has only one household pool of resources. And those taxpayers also are on the hook for all the other irresponsible decisions of multiple local and state governments.
Take Chicago’s sorry situation. As Lightfoot negotiates with teachers, she’s struggling to find revenue to close an $838 million gap in the city’s municipal budget. Part of the problem: In 2020, City Hall must contribute an extra $280 million for police and fire pensions to make up for years of underfunding. Add in two other weak funds — for municipal employees and laborers — and the numbers become dizzying: At the end of 2018, City Hall’s pension funds had only 23% of what they should have.
And that 2020 surcharge just buys the cheap seats. By 2023, Lightfoot must find an additional $989 million a year for pensions, according to the Tribune’s Hal Dardick and Juan Perez Jr. Thank you, former mayors and aldermen, for promising more pension benefits than Chicagoans could afford.
Again, this is just to address the city’s pension shortfall, which has risen from $23 billion to $30 billion. That’s after former Mayor Rahm Emanuel raised city taxes and fees to try tame the beast: The pressure on today’s and tomorrow’s taxpayers only grows. Remember that the state occasionally skipped contributions to its five pension funds for government workers, creating a $134 billion unfunded liability. That debt alone is more than triple Springfield’s annual operating budget.
Which brings us back to Lightfoot’s current negotiations: Teachers, school support staff and Park District workers are threatening to strike on Oct. 17 (after their Columbus Day holiday). Three labor groups want costly contracts, but Chicago has only one group of taxpayers to foot the bill. The mayor’s essential quandary is a collision of competing demands: Every tax dollar Lightfoot collects for city workers’ retirement benefits is a dollar she can’t collect for the education of schoolchildren.
Illinois voters are a year away from deciding whether to amend their constitution and embrace a graduated income tax. Gov. J.B. Pritzker says his tax package would affect only the top 3% of income tax filers. Maybe so at the get-go, but taxpayers are wising up to two realities. First: Freed of the current flat-tax requirement, lawmakers soon would impose higher tax rates on the middle class, too: That’s where the money is. Second, even as the Pritzker Tax looms, governments at all levels are squeezing taxpayers with property and other tax increases.
Repeating for emphasis: There’s only one set of taxpayers. Springfield’s apologists and tax-burden deniers don’t want to talk about that. They want to bamboozle Illinois voters with narrow factlets — California still would have a higher top income tax rate! — and pretend their data points prove that, en masse, this state’s governments aren’t taxaholics. But look around.
We began this editorial referencing contract talks between the teachers union and Chicago Public Schools. But the unheard voice at the table is our real focus: taxpayers.
It isn’t just that Illinois residents are overtaxed. The situation is worse than that. Worse, even, than so many Chicago and Illinois units of government that chronically promise too much, spend too much, borrow too much and owe too much. All in the name of that limited pool of taxpayers.
And for five years straight, as Illinois’ population shrinks, many taxpayers have departed while prospective taxpayers considered this state but settled elsewhere. Expats often pack up the U-Haul for Indiana or Wisconsin because taxes are lower and the outlook for employers is more stable. Or they go to destinations such as Texas because that’s where job growth is livelier.
What happens as the population declines and taxpayers flee? Property values fall, and the tax burden grows for those who remain. Chicago has a lot going for it as a global center of business, but the future economy looks fragile. The city will fight upstream to attract and retain employers (and employees) if City Hall raises the cost of living here to cover that extra $838 million for next year’s budget. Because that money has to come from somewhere. Taxpayers know it, and so do employers who do, or don’t, hire workers here. Yes, the Illinois Exodus is real.
Have we alarmed you? The situation is serious but not terminal. Chicago is dynamic. The Illinois economy is vibrant and diversified. The problem is rooted in government dysfunction. For too many years, leaders at the state and city level provided pay and retirement packages to government workers that were unaffordable. Hence all the debt, which must be paid.
The way forward is for government to spend within its means by attacking big structural costs, while at the same time generating more tax revenue by creating more taxpayers. Meaning Illinois must spur faster economic growth to generate more jobs.
Companies are willing, even eager, to locate in Chicago. But they don’t want to hitch their futures to a metropolis, a state, where they’ll get clobbered by tax increases that don’t solve the problems. Uber CEO Dara Khosrowshahi, who’s adding 2,000 workers in Chicago, told us this city is a terrific talent hub with a good quality of life and lower costs than coastal cities. Does he fear the unstable and onerous tax burdens? His general stance was instructive: “As long as everyone is lifting their fair share, and the proposals are fair and broad and data-based, I think we will be a reasonable participant.”
We’re not sure Illinois’ leaders recognize what Khosrowshahi and other employers are saying. They want a stable, business-friendly environment. They want Chicago and Illinois to get costs under control and lay out a realistic plan to pay what they owe.
The best way to rescue Illinois governments from themselves is to curb public pension benefits earned in the future. That also requires amending the Illinois Constitution. Giving voters a voice on that amendment — not just on the Pritzker Tax — will help state and local governments survive. So will affordable labor contracts. Mayor Lightfoot’s negotiations with Chicago teachers are part of the mix.
Because there’s only one set of taxpayers in Illinois.
October 6, 2019
The (Carbondale) Southern Illinoisan
Finding middle ground in the Shawnee National Forest
Thirty years later, history is repeating itself in the Shawnee National Forest.
In the early 1990s, the United States Forest Service awarded logging contracts for portions of the Shawnee. A small portion of the forest was logged before a grassroots movement of local environmentalists stopped the timber harvest with protests on the ground and successful actions in federal court.
Fast forward to 2019.
Once again, the U.S. Forest Service is planning to log a portion of the Shawnee. The plan, which is awaiting final approval by the U.S. Forest Service’s Eastern Region regional office in Milwaukee, is known as the Waterfall Stewardship Pilot Project.
The proposed harvest would take place in Jackson County on 485 acres south of Kinkaid Lake.
The battle lines are much the same as they were in the 1990s.
The Forest Service claims the logging is part of an ecological restoration effort, that the logging will improve the health of the oak-hickory forest. Lisa Helmig, acting forest supervisor, said the forest is suffering from the lack of disturbance, either man-made or natural.
Because there has been no disturbance, shade tolerant species like beech and maple have filled the midstory, depriving the forest floor of light and choking out young oak and hickory.
Those opposed to the timber sale say the biology is faulty. The environmental community states the Forest Service made essentially the same promises 30 years ago, and the results are don’t bear out the claims.
The environmental community claims the Forest Service can’t be trusted.
There is some validity to that claim. It’s not that the Forest Service’s science is faulty — we’re not in a position to make that statement. It’s that areas previously “restored” don’t exactly fit the description of a healthy oak-hickory forest.
Again, it’s not necessarily that the science is flawed. For a variety of reasons, including lack of funding, areas of the forest haven’t rebounded as promised. Helmig, who was not part of the Forest Service at the time, said her “gut reaction” is that secondary and tertiary phases of a multi-step treatment plan were never implemented.
That is a reasonable assumption.
And, frankly the Forest Service didn’t help its credibility earlier this summer when a Southern Illinois reporter was removed from an objection resolution meeting. Babete Anderson, the U.S. Forest Service’s national press officer, later stated the reporter should have been allowed to attend, but the initial action casts doubt upon the agency’s transparency.
But, there is more to the story.
The Forest Service plans to complement the logging with prescribed burns and the use of herbicides to control, and hopefully, eliminate invasive species.
That portion of the plan is also opposed by the environmental community.
In the final analysis, it seems there should be some middle ground.
Given the size of the forest, 265,000 acres, and the size of the proposed timber sale, less than 500 acres, it’s difficult to make a case for the urgency of this “restoration” project.
The fragmented nature of the forest would appear to lend itself to less invasive procedures. The Trail of Tears State Forest is a living laboratory of various ways to manage forests.
And, local agencies are currently implementing the “Let the Sun Shine In” approach to promoting oak and hickory growth. The program does involve cutting trees, but those are primarily trees in the midstory.
The process can be implemented without widespread degradation of the landscape. An area of Giant City State Park, located near Devils Standtable Trail, is currently undergoing that treatment.
The downed trees will later serve as fuel for controlled burns in an effort to restore grasses and sedges while eliminating invasive species.
Adopting such a plan would require good faith compromise from both sides. And, it would buy some time as data is collected and results monitored.
October 7, 2019
The (Champaign) News-Gazette
Financial report tough on state
Illinois is a real contender when it comes to a race to the fiscal bottom
When it comes to its finances, the state of Illinois has gone from bad to worse. The good news, if one can call it that, is it’s not yet the worst.
Truth in Accounting, a financial watchdog group, recently released its 10th annual report on the “Fiscal State of the States.”
Illinois ranked No. 48 last year and fell to No. 49 this year in terms of its financial distress.
“We’re the second-worst in the nation. New Jersey is the only one that’s ahead of us on that score, and it’s not a pretty picture. The deterioration happened in a year when the overall — or 50-state average — improved last year. Illinois did not improve. It continued to deteriorate,” said Bill Bergman, the organization’s research director.
Remember that the next time a state public official contends that the state is pulling itself out of a self-made financial mess. The governor and Legislature cannot continue to spend more money than the state takes in and expect real improvement in our effectively bankrupt state.
The top five states in terms of fiscal health, according to Truth in Accounting, are Alaska, North Dakota, Wyoming, Utah and Idaho.
The bottom five are Hawaii, Massachusetts, Connecticut, Illinois and New Jersey.
Illinois, of course, is hardly alone in terms of fiscal profligacy. The study found that “40 states do not have enough money to pay all of their bills and in total the states have racked up $1.5 trillion in unfunded state debt.”
Here are a few grim facts about Illinois finances that were cited by Truth in Accounting.
It noted that “Illinois’ elected officials have made repeated financial decisions that have left the state with a debt burden of $223.9 billion.” That breaks down to a “burden of $52,600 per taxpayer.”
On the assets and liabilities scale, Illinois has $28.9 billion available to pay $252.8 billion in bills.
Of course, the state doesn’t have to meet all of its obligations at once, so the assets/liabilities measure is not as terrifying as it appears. But, make no mistake about it, Illinois’ financial situation is desperate.
The state is overwhelmed by unpaid bills, public pension obligations and legislators’ insistence on continuing to spend more and more money the state doesn’t have. There is a reason, after all, why Illinois dropped from No. 48 to No. 49.
Thank God for New Jersey, the only state keeping Illinois from coming in dead last.