Mark Glennon explains why Illinois politicians haven’t fixed out fiscal crisis:
They haven’t had to figure it out because you voters haven’t figured it out. Wake up. Tell Pritzker and Lightfoot that pretty much every financial reform you’ve heard about must be effectuated immediately.
Headlines earlier this month focused on Mayor Lori Lightfoot groping for ways to deal with Chicago’s increased pension and other costs over the next few years. Lightfoot floundered looking for revenue solutions to the city’s own near-term bills—a state bailout and taxes on retirement income, which were shot down quickly. That’s unfortunate because the narrow focus masks far bigger problems for Chicago taxpayers.
To fully understand the trap Chicago is in, you must look at the others trapped with it.
Look at the true liability each household in Chicago faces for all the city’s overlapping units of government and, most important, remember that most Chicago households are in no position to contribute anything material.
We did that analysis at Wirepoints starting with unfunded pension liability numbers from Moody’s Investor Services. They use more realistic assumptions than are used in official reports. Beyond Chicago’s four pensions, Chicago taxpayers are on the hook for the Chicago Public Schools pension and their share of pensions run by Cook County, the Metropolitan Water & Reclamation District, the Forest Preserve District and the state’s five pensions, all of which are grossly underfunded. That total is $145,000 per household of unfunded pension liability for services already rendered, according to Moody’s.
But don’t stop there because you can’t take money from people who have none, and it would be wrong to try. Suppose you look only to the rich, which you generously define as those making over $200,000 per year—the top 7 percent. They would be on the hook for over $2 million of legacy pension liabilities. Even if you went down to taxing households making over $75,000 per year—the top 37 percent—those households would face a $393,000 liability.
Read more: Crain’s
Image credit: www.wirepoints.com.