Why out-migration is a concern for Illinois businesses

Illinois' population shrank by 104,437 from July 2021 to July 2022, according to Census estimates released at the end of 2022.

Population decline in Illinois and Cook County is driven by Illinoisans moving to other states. Our numbers are the second worst in the nation, following only Los Angeles County. Last fiscal year, Cook County netted a loss of 68,314 residents.

Those who remain have a negative outlook about the state. New polling shows 51% of Illinoisans would leave the state if given the chance. Those most likely to want to leave? Prime working-age adults, ages 41-49. This alarming trend has been going on since 2017, when IRS data showed Illinois residents ages 26-55 and their dependents contributed to 65% of that year's out-migration, surpassing retirees.

When Illinois loses prime working-age adults, we don't just lose their talent and value to the jobs market. The state also loses their buying power, meaning a sales tax hit. We lose their investment in local communities, meaning property taxes.

So what can be done to stop this trend from creating a dire future?

The good news is the polling we commissioned from Echelon Insights also showed us where residents want to see improvements that would help make the state more competitive.

Of the 51% of Illinoisans who said they'd leave, the top reason driving their response was high taxes. It's not surprising that was top of mind, because Illinois is home to the second-highest property taxes in the country. Plus, 57% said they didn't think the value of the government services they receive were worth the cost of the high state and local taxes they pay.

Businesses also feel this pinch, especially in recent years. Since taking office, Gov. J.B. Pritzker has passed 24 tax and fee hikes worth $5.24 billion. Of that, $650 million was directly targeted at businesses as they fought through a pandemic economy.

And the most painful tax burden residents face? Property taxes, which have increased by more than $4 billion since 2018. The reason property taxes keep growing: public pensions. Illinois' pension crisis has the state holding $140 billion and local governments another $70 billion in unfunded liabilities, a burden that creates a cycle of spending cuts, tax hike threats or deficit spending. Illinoisans prefer to address the pension crisis by amending the state constitution as opposed to hiking taxes and cutting services, according to the poll.

Pension reform, and subsequent property tax relief, would be welcomed by folks trying to run businesses here in Illinois. Voters polled strongly back this needed reform - by over 3 to 1, versus the state's go-to of raising taxes to fix pensions.

Newly elected local and state leaders shouldn't treat our population loss as inevitable. Low-tax jurisdictions such as Arizona, Florida and Texas have seen massive influxes in population. And it's not just warmer states that are seeing population growth: Idaho was also among the states with the highest population growth. Idaho's governor signed a $600 million tax cut into law at the beginning of 2022. Leaders there are onto something.

Illinois leaders should adopt similar pro-growth, pro-taxpayer policies to entice new businesses and residents to Illinois. Not only is this better for our economy, but it would also provide financial relief for the overburdened residents who are choosing to stay.

The people of Illinois are tired of the false choice they're presented, that the only way to address unaffordable pensions is to hike taxes, cut services or go even further into debt.

Elected leaders can reverse Illinoisans' negative outlook on our state. We need to go to Plan B: a constitutional amendment to protect already-earned pension benefits and curb the growth in future costs.

• Matt Paprocki is CEO of the Illinois Policy Institute, a think tank based in Chicago.

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