There are a lot of uniquely bad budgetary practices in Illinois that if ceased now, could save taxpayers millions.
This is important to remember not only in the context of budget negotiations, but also when judging different groups’ complaints about the budget impasse. If nothing else positive, the impasse has brought certain bad practice to light.
This could not be more evident than with a lawsuit this week coming from Chicago Public Schools, or CPS. CPS is suing Gov. Bruce Rauner and the Illinois State Board of Education, accusing the state of employing “separate and unequal systems of funding for public education in Illinois.”
The lawsuit asks that the state be found in violation of the Illinois Civil Rights Act for maintaining what CPS calls “separate and unequal” systems for funding school districts and pension obligations. The lawsuit points out that most CPS students are minorities and poor, while public school students in the rest of the state are “predominantly white.”
CPS could be right that there is some sort of discriminatory element to the district – but more so in the fact that poor and minority students are sentenced to terrible schools by their zip code. And that CPS has blocked charter school expansion in the city at the Chicago Teachers Union’s wishes.
But what CPS is not right about is the reasons for fiscal crisis. The district’s financial problem is not due to a lack of money. The district spends an exorbitant amount of money, including on some of the highest paid teachers and administrators throughout the country. Beyond that, the district – like many others across the state – engages in the irresponsible practice of pension pickups.
Since 1981, when it was negotiated as part of a collective bargaining agreement, CPS has been picking up part of teachers’ pension payments each year, meaning the district (and by extension, taxpayers) has been paying 7 percent of the teachers’ 9 percent payment. This practice has cost the district $1.2 billion alone in the last decade.
It’s unsustainable, reckless practice that pushes money out of classrooms.
Pension pickups are just one part of the burden teachers’ pensions impose on taxpayers. Teachers’ Retirement System, or TRS, does the pension system for teachers outside of CPS, does the same thing and has admitted it can’t meet the lofty investment return targets it previously had set for itself, leaving taxpayers with the tab for the shortfall. And TRS’ mismanagement mirrors CPS. TRS’ pension pickups cost taxpayers $134 million in fiscal year 2015 alone.
TRS’s investment return failures combined with pension pickups mean taxpayers are getting hit by pension costs on three sides. First, taxpayers pay the state’s employer pension contribution through income taxes. Second, many pick up their teachers’ required contributions through local property taxes. And finally, taxpayers have been solely responsible for bailing out the billions in pension fund failures.
Now, at the crux of CPS’ lawsuit, is the district asking for more funding, which would be at the expense of taxpayers throughout the state. Downstate taxpayers – who are already paying for their own districts – would have to bail out a failing district in CPS.
As we examine budgetary priorities during the state’s budget impasse, complaints like that in CPS’ lawsuit should be met with heavy skepticism. The district has been mismanaged and is failing financially, as well as in the classroom. The district needs significant fiscal and educational reforms before asking for a bailout from Illinois taxpayers.
By: State Senator Kyle McCarter
Last fall, the Paul Simon Public Policy Institute at SIU-Carbondale surveyed 1,000 Illinoisans about state government issues. 84% of registered voters told them Illinois was heading in the wrong direction. The poll, released on Oct. 10, 2016 found that taxes (27%) were the single biggest reason for leaving.
That level of dissatisfaction is not a surprise when you see what’s going on under the State Capitol Dome. The leadership in the Senate is pushing a “Grand Bargain” budget deal that is only “grand” in its demand for more taxpayer dollars. It’s certainly no “bargain.”
It calls for billions of dollars in higher taxes on income for individuals and corporations and new sales taxes on services. Working families and employers will be hit with tax rates back up to the level they were the last time income taxes were raised. That’ll cost you and I about two weeks of pay each year that the new higher tax rate is in place. In addition to the higher income taxes are dozens of new taxes on common everyday services we purchase. The Grand Bargain calls for sales taxes on cable and satellite TV, car repairs, dry cleaning, tickets to sporting events, club memberships, landscaping and many more services, too many to list without running out of space.
The last time we had a major income tax hike, 200,000 people fled Illinois to other states and Illinois continued to hemorrhage jobs, especially good-paying manufacturing jobs. While other states made adjustments to improve their business/jobs climate, following the 2008/2009 recession, Illinois kept it “business-as-usual.”
There is amazing creativity in Springfield when it comes to taking money out of people’s pockets, but there appears to be no creativity when it comes to reducing government spending and fiscal responsibility. Shrinking the size of government means more Liberty for the people. Unfortunately, it appears some people haven’t learned from past mistakes and instead are once again taking the path of penalizing the taxpayers.
I’ve heard from many people who are upset about what’s happening in Springfield. Here are just a few of the comments:
- “Our company employs over 30 people…Our disgust with this state, the excess of Workers’ Comp and tax costs has reached a boiling point. With the introduction of the Grand Bargain…we had a vote of our board members…and made a unanimous decision to take the costly step of moving our entire business to Indiana.”
- “Since I’m an owner of a 20-employee business and it looks like Illinois is not going to help me, I’m moving 12 miles west across the river. Just sad.”
- My son-in-law and I own and operate a landscaping business in Fairview Heights. We are struggling with Workers’ Compensation insurance premiums. We have an excellent reputation…But, the burden is being placed on us by the State of Illinois. This burden is almost too much to bear, so much so that we are discouraged from growing the business and hiring more employees.”
While none of the tax increases included in the Grand Bargain have passed, just the talk of new and higher taxes is driving businesses out of state. It’s a signal that Illinois government just doesn’t get it. There’s no respect for those who are working hard and paying the taxes in this state.
There are options to the raise-taxes-or-the-sky-will-fall attitude at the Capitol that surrounds the Grand Bargain budget deal, but establishment politicians don’t want to consider alternatives.
Since 2011, I have offered ideas to balance the state budget, pay off billions of dollars in old bills, eliminate budget debt and address the public pension debt bomb Illinois is leaving to our children and grandchildren. None of these plans includes taking money from the pockets of Illinois taxpayers, rather they would ensure taxpayers keep more of their money. Unfortunately, these ideas were rejected because they required smaller government and less power for Springfield. Smaller government equals greater freedom for the people. Illinois government cannot demand a level of government the people cannot afford. Good things can come out of smaller government. Churches can do more and private charities can do more.
Indiana Gov. Mitch Daniels, who successfully shrank state government and championed fiscal responsibility once said, “You will be amazed how much government people can live without, once it’s gone.”Changing the budget process to make taxpayers the priority and get Illinois’ fiscal house in order is just one step of reform state government needs and Illinoisans deserve. As the comments above indicate, there are burdensome regulations – like Workers’ Compensation – that hamstring employers, limit business growth and squash job creation.
Illinois has the highest Workers’ Comp rates in the Midwest. We are losing employers, especially manufacturers, to other states where they can save hundreds of thousands of dollars annually. Our current Workers’ Compensation System lacks one key component that could make a positive difference. It’s called “causation.” Adding a causation standard to the System would ensure employers are treated fairly and injured workers would receive the medical care they need to quickly to return to work. Causation is defined as the workplace being the majority cause of the injury or illness. Such a standard appears logical, but under current Illinois law an employer who is found to be only 25% responsible for an injury or illness, would still have to pay for 100% of the claim.
Why does Illinois government stubbornly refuse to address the fundamental causes of its economic decline? Why would we repeat the mistakes of the past and run people out of this state? Let’s demand Illinois’ leaders move us in the right direction. Let’s demand this government live within its means, just like you and I have to in our families and businesses. Let’s remind Republicans who claim to be against big government that the solution to this problem is smaller government instead of higher taxes.
I urge you to contact your Representatives and Senators. Ask them to answer these questions and respond to our demands. Tell them to vote no on the Grand Bargain’s new and higher taxes. Tell them, #HandsOFFMyMoney!
In 2010 Mark Kirk won in the highly contested U.S. Senate race against Alexi Giannoulias (D). However, his win didn’t translate to many other GOP victories in the state. The Republican nominees for governor Bill Brady and Lt Governor Jason Plummer both lost in a extremely tight race. Mark Kirk received much of his support from Independents and Blue-Dog Democrats, and because of that very few down ticket Republicans benefited from him being on the ticket. The status of the Republican Party in Illinois is still very weak even after the Bruce Rauner win in 2014. Democratic Congresswoman Tammy Duckworth has already announced a run against Senator Kirk. Duckworth will be one of, if not the top, candidates that the Democrats will put out in the entire nation. Senator Kirk continues to have health issues after his heartbreaking and debilitating stroke. Senator Mark Kirk appears to be the most endangered Republican Incumbent Senator in 2016. Duckworth will no doubt have a lot of money to spend and she already has a big backing nationally.
mickelson & company
The Republicans need to have a candidate that rallies the base. If the base gets excited and turns out, that could help the Republicans in the Illinois House pick up the one seat they need to breaking the super majority in Springfield. Breaking the super majority in Springfield would give Governor Rauner more flexibility in Springfield. One might ask what Republicans in Illinois excite the base? Some of the following come to mind: former Congresssman Bobby Schilling from the 17th District, former Lt Governor nominee Jason Plummer, and Congressman Adam Kinzinger from the 16th District. In Kinzinger’s case, despite having strained ties with many conservative groups, such a run could help mend the fences if he is the nominee and goes against Duckworth.
The consensus among many Republicans both in Illinois and in DC is that Senator Mark Kirk does not have the capability to run an active and energetic campaign against a solid campaigner like Duckworth who can rake in big campaign bucks and a state that has typically been blue for a number of years. With 2016 being a Presidential year and many democrats being very excited about Tammy Duckworth being the likely nominee the odds of the Republicans losing in a landslide in Illinois is heightened. The Republicans could lose seats in both the Illinois House and Senate where the Democrats already have the super majority. Without a strong Senate candidate Republicans could also lose in the 10th district where a rematch has already been set up against Robert Dold and Brad Schneider.
Senator Kirk has served with honor in the military and has had a successful political career running for Congress and for US Senate as a Republican in the home state of President Obama. If Senator Mark Kirk wishes for his seat to remain in Republican hands, it is best he step aside and allow a Schilling, Plummer or Kinzinger to step up and run an active and energetic campaign to defeat the Democrat Machine’s Tammy Duckworth.
Across the State of Illinois, except for Cook County, taxpayers will be receiving their property tax bills in the mail. For most this will cause outrage over how high these taxes are. Here are a few facts:
- Illinois is #2 nationally for the highest property taxes
- Highest Ranking Property Taxes by County, Illinois Counties
- Lake #17 nationally and #1 in the Midwest
- Dupage #23 nationally
- Kendall #28 nationally
- McHenry #29 nationally
- Kane #30 nationally
As you can see 5 of the top 30 counties with the highest property taxes are here in Illinois. So who is to blame for these high taxes and how can we stop them from increasing so fast?
First, a few definitions:
Levy – The amount of tax dollars the taxing body is requesting from the county tax extension office each year. A levy is a tax.
Extension – The actual amount of tax dollars allowed, based on tax rate, that the tax extension office is allowed to tax property owners and requested in the levy. An extension is the actual levy taxed.
Assessment – The assessed value of the property and improvements (buildings). This is not a tax, but what the shared tax liability is based on.
Tax Rate – The calculated rate that will be multiplied with 1/3 of the assessed value to get the actual tax dollars it will cost each property owner. (Cook County is 1/6)
PTELL (Tax Cap) – Property Tax Extension Limitation Law that prevents taxing bodies from increases their extended tax by the lesser of CPI (Consumer Price Index) or 5%.
Maximum Rate – The maximum allowable rate that can be extended in each fund per taxing body
First we must know who is at fault for the tax increases.
- Is the assessor at fault?
- Is the taxing body at fault?
- Is it the legislature in Springfield?
Here is a simple chart to show you it’s the taxing bodies increasing their levy every year. Detail for this chart are the bottom if you want to read further.
Tax rates fluctuate up and down in the opposite direction as the assessments. So when you hear a taxing body saying the tax rate went down, its because the assessment went up. Taxing bodies use this trick to claim they are lowering taxes when in fact they could have, and probably did, raise taxes.
Illinois has approximately 7000 taxing bodies, over 2000 more than the next closest state, Pennsylvania. This allows property taxes of Illinois to be far above average.
Property taxes in Illinois average 2.28 percent of a home’s value, according to the Urban Institute. In New Jersey, they’re 2.32 percent, and in lowest-taxing Hawaii, they’re 0.27 percent. (The lowest among mainland states is Alabama, at 0.46 percent.)
Springfield does not control property taxes directly. They put PTELL in place to prevent increases greater than CPI. They have also been discussing freezing property taxes. They cannot lower the property taxes. They have increased the homestead exemption over the years and aided senior citizens and veterans. Springfield does not control the raising or lowering of property taxes, that is the sole responsibility of the taxing bodies.
So what can citizens do to stop the ever increasing property taxes?
- Attend local taxing body meetings and provide input. Budget hearings start in June running through September. Most taxing bodies build the tax increase into their budgets. Ask them if the do. If they do, a vote for the budget is a vote for a tax increase.
- Attend the levy hearings which are typically October through December. Each taxing body is different so ask by getting involved.
- Run for local office yourself or recruit and help others. These elections are held in off years so 2017 is the next set of races. On April 7th was the last round. Voter turn out was barely over 10% in many areas. These elections are where you can have the greatest impact on your taxes, but few bother to get involved.
Conservatives are winning the debate on spending and fiscal responsibility. Much of the conversation out of both Springfield and Washington is about where cuts can be made and how to stop the growth of debt. The same must be done at the local levels. The only way to do this though is to get involved, ask questions and start holding these local officials accountable for their votes.
Please feel free to contact Illinois Conservatives for help in the questions you should ask and to share the stories you have of you local taxing body, both good and bad.
Illinois first passed its prevailing wage law back in 1941. It was passed to help protect employee salaries being reduced during bidding for a public project. It was also used as a mechanism to ensure that a labor dispute did not stop work on a public project. Unions once had a majority of construction employees as members. This has drastically plummeted with it down to 14% as of 2013. So it begs the question, in the year 2015 do we still need a prevailing wage law in the State of Illinois?
Has the prevailing wage laws changed over this same time period to reflect the new membership realities? The answer is no. Wages continue to be set at a union rate while 86% of the work force is not part of the union. There are many studies that show prevailing wage laws raise the cost of a project by 30-40 percent. Matt Crumb from Maclver Institute stated “As it turns out, prevailing wages can be up to 40 percent higher than competitive market wages, meaning taxpayers are hit with an extra cost burden on many government projects.” Reed the full story at Wisconsin Prevailing Wage:
Prevailing wage is a backward policy designed to ensure government contract workers are paid wage rates and receive benefits that are “prevailing” in a given industry or region. As it turns out, prevailing wages can be up to 40 percent higher than competitive market wages, meaning taxpayers are hit with an extra cost burden on many government projects.
Illinois is only one of nine states that require prevailing wage to be applied for every public project. The additional costs to county, towns, and villages are significant with this requirement. These same governmental bodies are all likely to have a reduction in state funding under Governor Rauner’s budget so eliminating the requirement of prevailing wage could be a key way for these types of governmental bodies to save money. It would also encourage governments to continue with long anticipated building projects.
Although the Governor does plan to cut back some revenue to smaller governments it appears with the elimination of prevailing wage and the institution of right to work, municipalities will be able to make up the difference.
As you can see the savings potential with the elimination of prevailing wage could help cover the cost of budget cuts for governments around Illinois.