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Johnston-Yurgine: Exodus from Illinois will be difficult to stop

January 13, 2019

Joe: A recent Wall Street Journal article, reported 114,000 residents left Illinois on net in 2018, and about 1.5 million have left since 2000. The exodus means a loss of billions in taxable revenue. If this keeps up, House seats in Congress could be lost. How do we end this migration? What needs to be done by the state and local governments?

Ken: It’s easy to understand why Illinois citizens are leaving, but it’s hard to come up with any fixes. Where to start? How about debt and taxes? During the course of a few decades, Illinois government has incurred unfunded obligations for government workers’ pensions. Negotiators for Illinois government seem to always have caved to union demands when facing strikes and work stoppage threats. Moreover, the government in Springfield often has deferred pension-fund allocations to use the money on higher-priority payments, and the pension funds, invested in real estate, stocks and bonds, are subject to market fluctuations that throw off actuarial calculations. The resulting current debt is on the order of $100 billion. Newly elected Gov. J.B. Pritzker has promised to work with legislator boss Michael Madigan to fix the problem by raising taxes on “the rich.” Rich in Illinois means getting a regular paycheck and not collecting food stamps. Thus, anyone who reads the newspaper has left, is leaving or is considering leaving, and the emigres include a lot of folks with skills and wherewithal — — only digging the hole deeper.

Joe: Debt is big and a serious problem. However, let’s set that aside and look solely at taxes and government as reasons for the migration. There is a tax lawyer and retirement specialist in Chicago by the name of Michael Foltz that I listened to recently at a seminar who claims the chief causes of migration are taxes, especially high state income and estate taxes. Frankly, I don’t know if that is true or not. Illinois has an income tax rate of 4.95 percent. There are other states that beat that. California has 13.3 percent, and Iowa has 8.98 percent. Illinois is one of 13 states to have an estate tax, but it doesn’t kick in until $4 million is transferred. When Prince, the 5-foot-2 “Purple Rain’’ singer died near Minneapolis, he left an estate worth $300 million dollars. Had he lived and died 300 miles to the east in Wisconsin where there is no estate tax, his estate would have saved $50 million dollars. So, on the state level, I suppose, income and estate taxes can motivate people to move. By the way, Foltz believes Florida, Alaska, South Dakota, Texas, Nevada and Wyoming are the best states to retire in because they have no income or estate tax. But let’s also look at Illinois county and local governments regarding taxes. Illinois and New Jersey lead the country in local governmental units. In our county of about 105,000 people, we have 16 municipalities, 17 townships, 12 school districts, 17 fire districts, 12 public library districts, county government, plus an airport authority, all taxing bodies, with a plethora of lawyers, accountants, insurance needs, payroll, pension and medical benefits. What do you think? Is this sustainable and does it have any influence on migration when a homeowner looks at his property tax bill?

Ken: Agreed, taxes are the big motivation to motor out as long as there are states with much lower taxes. Not that there aren’t a few other issues — famously, weather that’s seasonally always either too hot or too cold; in our big city on the big lake, a walk in the park after dark is as dangerous as driving a Humvee down the street in Kabul; Illinois is well known for some notoriously corrupt governments; yada, yada. The idea of some kind of consolidation to reduce the cost of government by eliminating redundancies is not new, but while still intriguing, it has some obvious snags. Government workers at every level, elected and employed, can’t be expected to give up their jobs without a fight, and I’m sure there is a large relevant body of law, by statute and constitutional. So, the process would have to begin with a public referendum. Perhaps there would be a tsunami of support; perhaps we will find out a lot of residents like the flavor of their own little community, public services and schools, and the feeling of personally knowing the officials who run things. What would maybe convince me to sign a petition or vote for some type of consolidation would be finding out the exact details of the proposal including a worksheet ending with a realistic estimate of how much tax I will save. That calls for a champion with fire in the belly to present a real doable plan and then push hard. Do you know anyone like that?

Joe: When Ronald Reagan was around, he stated, “Government is the problem.” I don’t entirely agree with that. I grew up here and went through public schools. The government in our county as it exists today has been with us a long time. I agree consolidation has snags. True, there is probably room for more efficiency, but if the people wanted it changed they would have done it by now. Some will ask, “What has all of this government done for us?” Probably something to keep in mind is while living here, we could not have gotten through without the hardworking men and women of the police and fire departments, the public road crews, the libraries, clean water and sanitation, and other public agencies. Who among us can say that we managed to pick ourselves up by our bootstraps without the help and support from schools and school teachers, many we still remember by name? Kankakee County with its proximity to Chicago has the river, roads and rails, excellent hospitals and health care, along with Olivet Nazarene University and Kankakee Community College. It has a lot to offer. In terms of leaving the state and migration, I think you touched on the cause with your initial comment, which is the matter of large state debt and unpaid bills, which brings with it uncertainty. Jim Nowlan discussed this last week in the Daily Journal with his column. Someone has to attack and solve those issues.

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