Chicago, northern Illinois not part of Wisconsin in order to help free states

The original northern border of the state of Illinois was the southern tip of Lake Michigan but Nathaniel Pope helped change this:

[T]he shrewd move in 1818 by Nathaniel Pope, the Illinois Territory’s delegate in Congress, to relocate the original proposed boundary from the southern tip of Lake Michigan is regarded as a decisive event in Illinois history…

Pope’s move provided the groundwork for Chicago to become Illinois’ economic juggernaut and literally turned state politics upside-down as the area grew. But it also had the national implication of ensuring Illinois would be a free state at a time of percolating political unrest over slavery…

Congress “wanted to have a water route between the Great Lakes and the Mississippi River for shipping supplies and soldiers if needed, since the Ohio River route could become contested,” said Olson, co-author of a new book “Managing Mississippi and Ohio River Landscapes” that includes a chapter on the northern border.

Along with giving Illinois access to Lake Michigan, Pope’s border modification raised the population nearly to the 40,000 required for statehood, Olson said in an article he co-authored for the Journal of Earth Science and Engineering.

This is interesting history given Illinois’ later connection to Abraham Lincoln and fighting slavery as well as the rapid spread of the Republican Party and its abolitionist priorities when the party was first founded in Wisconsin in the 1850s.

It might even be more intriguing to see how Pope and others thought about the southwestern edge of Lake Michigan. This was not the only point by which people and supplies could be transferred between the Great Lakes and the Mississippi. Indeed, it was not until several treaties, including a few after statehood (see the Treaty of Chicago), and the construction of the Illinois and Michigan Canal (begun in the 1830s and completed in the late 1840s) that Chicago became a candidate for explosive growth. (And grow it did and quickly encompassed an entire region including significant portions of Wisconsin – see Cronon’s Nature’s Metropolis).

Why doesn’t everyone leave Chicago or Illinois?

With the recent news of Chicago’s continuing population decline as well as population loss in some suburbs, some critics have suggested this all makes sense with the problems facing Chicago and the state of Illinois. The argument goes like this: when social, economic, and political conditions are bad, people vote with their feet and leave. Look at all the people moving to Texas and the Sun Belt!

However, there are multiple reasons people stay in Chicago and Illinois. Among them:

  1. It is costly financially to move. It takes time and money to move to a new location. Having a good job on the other hand is needed.
  2. It is costly socially to move. Finding new friends and social connections can be difficult, particularly in today’s society where Americans tend to stick to themselves.
  3. They have a good job in Illinois or Chicago. There are still plenty of good jobs here; Chicago is the #7 global city after all and there are lots of headquarters, major offices, and research facilities alongside large service and retail sectors.
  4. They have families or ties to the area. The Chicago region is the third biggest in the country – over 9 million residents – and there are lots of residents with long histories and/or many connections.
  5. Both places have a lot of amenities. One of the busiest airports in the world? Impressive skyline? Access to Lake Michigan? Good farmland? Located in the center geographically and socially in the United States? Land of Lincoln?

All that said, for the vast majority of Chicago and Illinois resident, there are not enough negatives outweighing the positives of staying. (This is not the same as saying current residents are happy or wouldn’t prefer to live somewhere else.) Compared to other American locations which are growing more quickly, it doesn’t look good but Chicago and Illinois also aren’t emptying out like American major cities did in the postwar era or some rural areas.

Video gambling in Illinois trickles money into local coffers

As video gambling has spread across Illinois, who is making money? A little is going to local governments:

Video gaming revenues, after payouts, are taxed at a flat 30 percent rate. Five-sixths of those tax proceeds go to the state and one-sixth to the local government. Remaining revenues — the other 70 percent — go to the establishments, like Lucky Jack’s, and the video terminal operators.In the year ended in September, almost $12.7 million was played at Lucky Jack’s in Waukegan, and $11.7 million was won by gamblers, according to Illinois Gaming Board statistics. That means the terminals netted just shy of $1 million. Of that, more than $246,000 went to the state and about $49,000 to Waukegan. The rest is split between Lucky Jack’s and Gold Rush Gaming, its terminal operator…

In Waukegan, a resolution passed in 2014 earmarked virtually all of its cut of gambling revenues for the underfunded pension plans of its police officers and firefighters. Were it not for video gambling, the resolution said, taxpayers might have to cover the shortfall.

Not every municipality, however, is looking at the terminals as a cash cow. Chicago, Naperville and Arlington Heights don’t allow them…

The cities with the most video gambling terminals are Springfield, Rockford and Decatur. The counties with the most machines are Cook, Lake and Winnebago counties, the commission report said.

In an era when many municipalities are looking for every cent they can, video gambling can provide some revenue. But, many communities likely consider a fraught deal: it may start a trickle of money but it also projects a particular image. One anecdote in the article suggested people pull up to a local establishment with video gambling and idle as they wait from some signal from inside that a spot at one of the machines is open. Is this what a wealthier community wants to be known for? Like tattoo parlors and bars, many places wouldn’t want to avoid the stigma of gambling establishments.

It would also be interesting to know whether these more local operations siphon money from casinos which could generate significant revenues for local governments. In other words, if every gas station or local eatery had video gambling, would there be enough money to go around? Do people simply go to the places that are most convenient to them or would they cluster in places with either better or more video gambling options?

How Illinois residents want to close the budget gap

A recent report sums up how Illinois residents between 2008 and 2016 want to address the state’s budget issues:

First, here’s how people want to address the budget deficit, according to the most recent polling.

Party Cuts Both Revenues Haven’t Thought Don’t Know/Other
Total 47% 33% 10% 4% 6%
Democrats 36% 36% 16% 5% 7%
Republicans 60% 32% 4% 3% 2%
Independents 50% 34% 9% 4% 3%
SOURCE: Paul Simon Institute of Public Policy…
So maybe we don’t want to cut our way to a balanced budget after all. Which makes sense, since it’s more or less impossible to do so without gutting programs that people support and use. That makes the next question all the more relevant: What new revenues do people favor?…
But there’s one thing that is relatively popular: soaking the rich. And the more closely targeted the policy is towards the rich, the more popular it is…
All in all, it’s a good measure of why we’re in such chaos. We claim we want to cut our way out of the problem, but only one type of cut (pensions) gets even close to an overall majority and is constitutionally prohibited. We’re actually in favor of higher taxes, but only in forms that are constitutionally prohibited, not that even an advisory referendum on a millionaire’s tax can make it onto the ballot. And one of the governor’s pet projects, extremely popular among the electorate and a potentially valuable piece of political leverage, would most likely do little to alleviate any of these problems.

Not a very hopeful analysis. In other words, voters and politicians have worked together to put together plans that significant portions of voters liked (i.e., pensions) but then neither want to enact certain changes (spending cuts and new taxes) that would help solve the past problems.

Is this good evidence for hitting a reset button on the entire state government? Bankruptcy to deal with existing debts? A completely new tax structure? More broadly, a new state constitution? Past actions in a bureaucracy tend to constrain certain future actions while enabling others…has Illinois simply run out of palatable options?

IL lawmaker considering tax by mile proposal

One influential Illinois legislator is looking into taxing drivers per miles driven:

A new proposal to pay for fixing Illinois’ roads could use devices to track how far Illinois drivers have traveled and tax them by the mile.

The plan from Senate President John Cullerton, a Chicago Democrat, is aimed at gasoline tax revenues that have fallen as drivers have bought more fuel-efficient cars…

Drivers, under the plan, could pick whether a device in their cars monitors their miles one of two different ways. Or they could choose to pay the 1.5-cent-per-mile tax on a base 30,000 miles traveled per year, if they have privacy concerns.

One device would track where specifically drivers go and not charge them when they travel out of state or on Illinois toll roads. The other would simply monitor the odometer reading, not tracking the rest of the information.

Illinois drivers would get a refund for gasoline tax costs paid at the pump, Cullerton said. Out-of-state drivers not registered here would pay those taxes as usual.

The article suggests this could come to a vote in a few days but I suspect it will take some time as there are a number of important details to work out. This has been considered elsewhere (see earlier posts here and here involving Oregon) but this seems like a quick move in Illinois. Gas tax revenue has dropped in Illinois in recent years.

These important details might go beyond the technical details and involve trust in politicians. Do Illinois residents trust their own government to (1) track the data properly and (2) refund gas taxes paid at the pump?

Illinois bans creating new government bodies for four years

Among new laws in Illinois is one that limits the formation of new government units:

HB 0228: Prohibits creating new levels of government for four years.

The Chicago Tribune interprets this law:

No new units of government can be formed in Illinois for four years.

According to Illinois Policy, Illinois has the most local governments with 6,963, giving Illinois nearly a 2,000 unit lead over Texas. A four year ban presumably slows the growth of these government bodies but I still have questions about the efficacy of this law:

  1. Does this translate into savings for taxpayers? Perhaps it simply slows future costs.
  2. Does this mean that lawmakers were unable to consolidate local governments and this was the best they could do? On one hand, people decry the spread of local governments and taxing bodies but they tend to like local control when it suits their interests.
  3. Are any others states ever going to approach the number of local government units that Illinois has?

Illinois tax breaks often fail to add jobs or keep companies

The Chicago Tribune finds that tax breaks from the state of Illinois often do not work as intended:

In the first comprehensive analysis of 783 EDGE agreements, the Chicago Tribune found that two of every three businesses that completed the incentive program failed to maintain the number of employees they agreed to retain or hire.

State officials can’t say how many jobs have been created through the job program; nor can they say how many jobs EDGE companies have eliminated. The Tribune, however, found that 79 current or former EDGE recipients have reported eliminating 23,369 jobs through layoffs and closures since entering the program.

Officials have long pitched tax breaks as a competitive tool that bolsters the state’s fragile economy, and the program has seen explosive growth as Illinois battles with other states to attract and retain businesses. Leaders of the EDGE program say it has been a lifeline for dozens of companies, helping to create new jobs and improve workplaces.

But the Tribune’s analysis suggests that tax credits often do little to help companies expand or create sustainable jobs. A pattern of deals emerges in which businesses lobbied for maximum rewards and minimum requirements — and the state said yes.

Tax breaks may help politicians claim they are bringing in new jobs and money but they don’t often benefit taxpayers as much as the political and business leaders suggest. See earlier posts here and here. And perhaps the biggest issue is that once come communities or state start offering tax breaks, everyone feels like they have to play the game as well just to get a hearing from major corporations. It can then become a race to the bottom: as governments offer more and more breaks, companies benefit more and more yet the local area gets less and less.

If the Tribune‘s analysis is correct, perhaps a better route for the state would be to improve business conditions overall rather than resorting to tax breaks to simply survive.