Two crises lawmakers still haven't addressed
The bad news keeps pouring in for Illinois. Our state's credit rating was just downgraded once again by two major rating agencies. The bonds our state issues to pay for public works project are now just a few notches above "junk" status - meaning Illinois is considered at high risk of defaulting.
If you're wondering why Illinois is considered such a bad investment, you needn't look any further than our ongoing budget debacle. For the second year in the row, Springfield has failed to produce a budget for key state services. Most budget proposals have been unrealistic - one coming from the state House of Representatives late May was the largest in Illinois history, and if enacted would have produced a dangerous $7 billion deficit.
Legislators shouldn't have left Springfield without addressing ways to combat runaway spending. It's not too late, however. Rather than debate one unrealistic budget proposal after another, the General Assembly should tackle two of the most pressing issues affecting taxpayers and the budget: high property taxes and runaway pension costs.
Start with property tax reform, an area where Illinoisans are being grossly overcharged.
We pay the nation's highest median property taxes - 2.67 percent, or double the national rate. In the last quarter century, Illinois residential property taxes have grown over three times faster than household incomes.
These high taxes affect everybody - not just homeowners. Landlords often have no choice but to price property tax increases into the rent they charge, meaning that renters are just as likely to feel the pain when property taxes rise. This is on display in Chicago, where roughly one-fourth of lower- and middle-income households spend 50 percent or more of their income on housing.
That's why property tax relief makes sense.
A property tax freeze - or better yet, efforts to reduce these taxes - could go a long way toward keeping money in our citizens' pockets, which is where it belongs. More money in our pockets means more room for us to invest in our community, spurring economic growth in the process.
But spurring growth isn't enough. We must also address our government's overspending. First and foremost, we must take care of the $113 billion in unfunded liabilities looming over our heads - money we've promised but simply don't have. In fact, all of the state's five major pension funds are unable to meet their obligations.
To take one example: Illinois lawmakers' General Assembly pension dishes out an average of nearly $60,000 a year to ex-politicians, who on average retire at age 60. Sound like a great deal? Maybe for them, but not for taxpayers; that fund alone has almost $279 million in unfunded liabilities.
Teachers' pensions are faring even worse, with over $60 billion in unfunded liabilities on the table.
Unfortunately, rather than taking steps to address the state's pension crisis, legislators left Springfield without so much as a vote on modest reform. In fact, after Gov. Bruce Rauner voiced support, Senate Democrats decided to not act on their own reform plan that they passed last year.
We can't afford inaction.
To fix this mess, we must pay down the debts our pension system has created and reform the pensions to prevent this from happening again. This will require amending our state constitution, which currently prevents most significant changes to the state pension system.
We don't have much time.
Illinois is on a fast track to disaster, and everyone seems to recognize it but the state legislature. Lowering property taxes and reforming state pensions are absolutely crucial.
They would spur economic growth, help pay down our massive debts, and ultimately begin the long overdue process of saving our state.
David From is the Illinois state director of Americans for Prosperity.