Here's what it really takes to make Illinois the best place to live and work
Last month, Gov. J.B. Pritzker took a trade tour of the United Kingdom aimed at driving opportunities for investment in Illinois.
"When I first ran for governor, I promised to be our state's best chief marketing officer - letting the world know that Illinois is the best place to live, work and do business," Pritzker said.
He traveled abroad to tout Illinois' "booming electric vehicle ecosystem and ambitious clean energy goals." But those are minor compared to what ails most businesses that now call Illinois home.
So what will it really take to make Illinois the best place to live, work and do business?
Start with the most pressing and obvious: fixing pensions.
If you were to ask a local business owner in Cook County about their operating expenses during the past two decades, they would likely mention a frustrating trend: the rise of commercial property taxes.
Total Cook County commercial property tax bills paid in 2022 are 74.5% higher than those paid in 2003. The situation is even more pronounced in the North and Northwest suburbs, where commercial property taxes have seen a 134% surge. Research has shown a large share of commercial property taxes are simply passed on to tenants in the form of higher rents, which makes running a business more unaffordable.
The No. 1 reason for growing property taxes is rising pension payments that eat up state and local resources. As the debt and payments rise, so too do property taxes to fund them - with less money available for services.
It is no surprise the Illinois Policy Institute's latest Lincoln Poll found the top issues facing Illinoisans today are crime and high taxes.
Illinois' five pension systems - and their $140 billion in unfunded obligations - also are eating into state services. A case in point is the amount we can invest in higher education.
This fiscal year Illinois' higher education institutions are set to receive $1.12 billion less, when adjusted for inflation, from the state than they did 15 years ago. That's an 11% drop in per-student spending for Illinois universities. The result is soaring tuition and fees. The average cost of tuition and fees at Illinois' public four-year universities nearly doubled from $8,553 to $16,539 between the 2007-2008 academic year and 2021-2022 academic year.
One of the largest factors is the rapidly increasing cost of university pension payments. Back in 2009, only 14 cents of every higher education dollar went toward faculty pensions. Now, those payments consume 43 cents of each higher education dollar spent by the state.
As Illinois colleges become more expensive, a concern is permanent "brain drain" - losing educated, up-and-coming talent from Illinois.
Data from the IRS shows those under 26 are leaving Illinois on net. While this age only accounts for 5% of total Illinois out-migration, the implications could last generations.
When students attend college in another state, they may be more likely to create new connections and plant new roots in their new home, rather than return to Illinois. Meanwhile, the majority of those leaving Illinois are already prime working ages and their dependents. All this leaves businesses facing a struggle to attract, retain, recruit and train a workforce.
Fixing the pension system would seep deeply into Illinois' economy, making the state more affordable and easier to invest in.
A "hold harmless" pension reform plan that would protect already-earned benefits - based loosely on bipartisan 2013 reforms - could help to eliminate the state's unfunded pension liability and achieve retirement security for pensioners. But to keep reforms from being rejected by the courts as the 2013 changes were, the Illinois Constitution needs to be amended.
So far Pritzker has made the standard pension payments. But if he wants his international trade missions to be successful, he will need to lead our state on fixing this crisis long term.
• Matt Paprocki is president and CEO of the Illinois Policy Institute, a nonpartisan research organization.