Tag Archives: Illinois

Why doesn’t everyone leave Chicago or Illinois?

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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

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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

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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

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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

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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

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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.

Indiana again takes aim at Illinois businesses

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The Illinoyed campaign ended but Indiana has a new strategy to lure Illinois businesses. From the featured story on the A State That Works website:

The state of Illinois has been drowning in debt for years due to mismanagement, and their only solution is to keep raising taxes. Sound familiar? Illinois taxpayers have been picking up the tab for longer than anyone cares to remember, but it wasn’t always that way.

Ten years ago Indiana and Illinois had the same AA credit rating, but the unfunded pension debt crisis in Illinois has steadily deteriorated over the years, to the point that their current credit rating of A- is the worst in the nation.

Illinois is borrowing a staggering amount of money to pay for state services and they’re seen as a bad risk to keep making those payments, according to the rating agencies. In fact, the interest alone on Illinois’ unfunded liabilities is about $1.5 billion per year…

Indiana is deliberately making smart financial decisions and defining what a state can do to pass the savings of efficient government on to their taxpayers by eliminating debt, keeping taxes low and continually balancing their budget.  It’s a refreshing change from a state like Illinois that has taxpayers picking up the tab for a public debt-management crisis, and it’s what makes Indiana a state that works.

Such efforts have been going on for quite a while yet I haven’t seen evidence that shows a campaign like this works. I’ve long suspected this is more about scoring easy political points than anything else; “look at the good things happening in Indiana while Illinois languishes.” Yet, somehow the Chicago region with its 9+ million people hangs on and the city is continually ranked as one of the top 10 global cities in the world.

One side note: part of northwest Indiana is in the Chicago metropolitan region. According to this campaign, some might get the best of both worlds: the residents and businesses get the lower taxes, less political gridlock, and less debt yet get to take advantage of the jobs and other opportunities the Chicago area offers. In the long run, a significant decline in Illinois or Chicago’s fortunes probably would have some residual negative effects not just on northwest Indiana but also the entire state.

Indiana moving away from “Illinoyed” campaign to attract businesses?

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Indiana continues campaigns to catch the attention of Illinois firms but it may soon take a different tone:

For three years, in an economic development strategy aimed squarely at jobs and revenue in higher-tax states, Indiana has been trying to poach Illinois businesses. While they say the tactic has succeeded wildly, officials in Illinois say the impact of cross-border moves largely has been a wash, more political theater than anything substantive…

Kelly Harrington Nicholl, head of marketing at the development corporation since 2009, is the woman behind Indiana’s most memorably catty catchphrases: “Illinoyed” and “Stillinoyed.” But after years of poking fun at its fiscally challenged neighbor, Indiana is about to soften its tone. “We’re not going to beat up on Chicago anymore,” Smith says.

This means that a cluster of billboards along I-90 cautioning northbound drivers that higher taxes lie ahead will come down soon, Nicholl says. “It’s time to play nice,” she says. She declines to say whether Illinois’ newly elected Republican governor, Bruce Rauner, has anything to do with it. “There is a sunset to everything.”…

Despite Indiana’s bravado, the number of state-to-state moves are increasing in both directions, according to an analysis of preliminary data by the Chicago Metropolitan Agency for Planning. The data, supplied by New Jersey-based research firm Dun & Bradstreet, show 70 companies in Illinois relocated their entire business or branches of their business to Indiana in 2013, up from 40 in 2012. During the same period, 48 companies in Indiana moved all or portions of their businesses to Illinois, up from 39 in 2012.

The shift in political theater is noteworthy. Did everyone in Indiana get the political things they wanted? While the shift may be due to Rauner’s election, I wonder if it could also be due to (1) the Illinoyed campaign wearing out (marketing campaigns have a limited shelf life before people stop responding and (2) recognition that, according to the data, the campaign has been a wash (even popular lines can’t hold up forever if not supported by evidence). The competition between the states is likely not completely over but it is interesting to consider how Illinois and Indiana might cooperate to enhance the economies of both states…

Illinois property taxes second-highest in the nation

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A new report shows at the end of 2012 Illinois had the second-highest property taxes, just behind New Jersey:

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.)All the states that ranked ahead of Illinois in the 2007–11 chart saw their tax rates go up in 2012. But the rate in Illinois went up more…

What’s moving us up the list? Home values are down but taxing bodies’ appetites are up, as Costin sees it. Illinois home values fell farther and are improving more slowly than those in many other states. The latest Case-Shiller index data, which came out on New Year’s Eve, showed that while home values in the nation’s ten major cities have recovered, on average, to June 2004 levels, they’re only back to February 2003 levels in Chicago. At the same time, Costin says, “most local taxing bodies do the maximum increase they can do under the law each year.” Lombard and Lake County are notable exceptions, he says; both have reduced their rates.

When they’re asking for more total dollars in taxation on a smaller pot of aggregate home values, the tax rate is what goes up. It doesn’t necessarily mean that the amount of tax you have to pay goes up, as Cook County pointed out earlier this year.

While there are concerns about the federal budget as well as the monetary issues of the state of Illinois, these rising property taxes hint at another concern: the need for tax revenues for lower levels of government. These property taxes primarily go for local schools, cities, and other local services. See where property taxes go in one town in DuPage County. Or how one Chicago suburb is thinking about privatizing more of its roads to pay for their maintenance.

It is interesting to note that property taxes are higher in specific states but not others. For example, much of the Northeast and upper Midwest has higher property taxes but while Kansas and Texas do, Oklahoma does not. And, California does not. In a state where one city went bankrupt are others have looked to outsource municipal services, the property tax revolts of the 1970s (see Prop 13) have successfully kept property tax rates down (though home values are still high). Yet, if the money doesn’t come through property taxes, it likely comes from other sources.

Illinois the first Midwest state to have majority of minority students in public schools

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New data shows that Illinois for the first time has a majority of minority students in the state’s public schools:

Whites fell to 49.76 percent of the student body this school year, the new data show, a demographic tipping point that came after years of sliding white enrollment and a rise in Latino, Asian and multiracial students.

The black student population also has declined, but it still makes up almost 18 percent of the state’s public school students…

If those numbers hold, Illinois would be one of a dozen states — and the first in the Midwest — to have a school system in which minority students are in the majority, according to the most recent federal education data. Included in that category are Western and Southern states with large Latino or black populations, as well as the District of Columbia, according to the National Center for Education Statistics…

Illinois’ diverse student population doesn’t match the diversity of its teaching staff. Based on 2012 state data, 83 percent of Illinois’ public school teachers are white.

This is a relatively common thing in the United States today though it is unusual for it to happen to a Midwestern state. Relative to whites, minority populations in the United States have been growing.

One way this happens is through immigration. This is a reminder that although certain states are associated with immigration – places like California, Texas, Florida – immigration is closely tied to big cities. Here are some bits from a 2012 Census report looking at foreign-born populations in the 2010 Census:

While the foreign born resided in every state in 2010, over half lived in just four states: California, New York, Texas, and Florida. Over one-fourth of the total foreign-born population lived in California…
In 14 states and the District of Columbia, the percentage of foreign born was equal to or greater than the national average of 13 percent. With the exception of Texas, Florida, and Illinois, these states were primarily in the western and northeastern parts of the country.
With the exception of Illinois (14 percent), the percentage of foreign born in all states of the Midwest region was below 8 percent, including North Dakota and South Dakota, each with about 3 percent.

The Chicago region draws a large amount of immigrants and drew a large number of black migrants during the early 1900s in the Great Migration. Without the draw of jobs and opportunities in Chicago, the demographics of Illinois children today might look much more like Iowa or Wisconsin.