By John Ruberry
There is never a shortage of evidence of the decline and fall of Illinois. Just a week after I authored Tales from the Illinois Exodus–Part One in this space, I already have a second entry.
In two weeks Chicagoans will elect its first female black mayor as two very liberal candidates, Lori Lightfoot and Toni Preckwinkle, face off in a runoff election. As the pair pretty much agree on most issues, the candidates are for the most part accusing each other being beholden to machine politics. Yawn.
What is not being discussed by the candidates is the pension bomb. Chicago’s four municipal-controlled pension plans are funded at 27 percent–80 percent is considered the goal for most plans. Forbes points out that the Teamsters/Central States’ pension plan, which is funded at 38 percent, is projected to become insolvent in 2025. Sure, Chicago, unlike the Teamsters, can raise taxes, and it has been doing so to fund these pension obligations, but Chicago is the only large American city losing population. More tax hikes will likely accelerate the exodus.
Historians decades from now will be aghast on how Preckwinkle and Lightfoot, and voters, ignored the pension debacle. Financially speaking, Chicago is the Titanic zooming in on that iceberg, it is Pompeii just before Mount Vesuvius erupted, it is of course Wall Street at dawn on Black Tuesday in 1929.
Preckwinkle and Lightfoot are vague about the need for new city taxes, with one exception. Lightfoot favors an increase in Chicago’s hotel tax, already the highest in the nation, to pay for–wait for it–the arts. Both of them support Governor JB Pritzker’s plan to switch Illinois from a flat rate income tax state to a progressive one. They expect state revenue to soar and they are looking for extra cash from Springfield to lessen the bleeding.
But Pritzker and his fellow Democrats need that money to pay for Illinois’ own woefully underfunded pension plans. In 2017, according to Moody’s, the Prairie State’s unfunded pension liabilities were at 601 percent of Illinois’ revenue. No other state has ever reached that millstone.
Pritzker also needs $500 million to bail out College Illinois. Sure, considering the financial sinkhole Illinois has dug for itself, that’s not a lot of money, but stay with me on this one. College Illinois is program where parents, grandparents, or heck, anyone can prepay tuition at a state school for the youngsters of their choice. Most Illinoisans presume that the program is guaranteed by the state. It is not. But because of that assumption–and the desire to avoid the anger of people who paid into the fund–a taxpayer funded bailout of College Illinois is expected.
What went wrong with College Illinois? Politicians, among them disgraced Gov. Rod Blagojevich, destroyed it with risky hedge fund and real estate investments, as well as others with defunct electric carmaker Fisker Automotive and ShoreBank, a failed financial institution that Barack Obama touted. ShoreBank mixed business with leftist politics with predictable results.
In Part One of this series I reported on how Western Illinois University, which is suffering from a decline in enrollment, is laying off over 100 staff and faculty members. Western, along with Northern, Eastern, and Southern (Carbondale) Illinois universities are collectively educating 30 percent fewer students than they did in 2008.
Meanwhile nearly half of Illinois high school graduates enrolling at four-year colleges choose an out-of-state institution. In 2002 just under 30 percent did so. Apologists for the status quo in Illinois blame the 2015-2017 budget impasse for this shift. But the enrollment migration is a long-term trend and two years after a massive income tax hike ended the budget stalemate the brain drain continues.
In recent years I’ve seen billboards here in Illinois for schools like University of Wisconsin-Milwaukee, Bowling Green, and Southern New Hampshire University. Western Michigan University and Central Michigan University offer in-state tuition to Illinois residents. The vultures–and that is not to say these are bad schools–are picking the bones of the corpse.
When students enroll at out of state colleges they are less likely to return home. Illinois, like Chicago, is also facing negative population growth. And the future of the state is surrendering because of Illinois’ present.
Back to Illinois’ largest city.
Overlooked among Chicago’s municipal elections is the runoff for the city treasurer’s office. The centerpiece of Ameya Pawar’s campaign is the creation of a Chicago-owned bank that will, of course, work “for the people.” Pawar is a naïve fool. Before long, Chicago’s crooked politicians will turn such a financial institution into a piggy bank of graft and malfeasance.
Look what happened to College Illinois. And the state pension plans–as well as Chicago’s. Or the many other government-funded pensions in the Land of Lincoln that are sucked dry.
One more item. Last week Alderman Willie Cochran became the 35th member of Chicago’s Hall of Shame, which consists of members of the City Council who have been convicted of federal crimes–or pleaded guilty to them–since 1973. Earlier this year the feds issued a criminal complaint against Alderman Ed Burke, the longtime chairman of the City Council Finance Committee. He’s no longer at that post, but presumably the person at that helm would have a strong say in what happens at a Chicago public bank.
Decline and fall.
Related post: Tales from the Illinois Exodus–Part One.
John Ruberry regularly blogs from his Illinois home at Marathon Pundit.