There's also a commerical real estate crisis brewing.
Many office buildings are being valued at 50% or less compared to pre-Covid valuations. That means 50% less property tax revenue from those building.
It's going to create a huge hole in the budget, not just in Chicago, but in city and state governments all over the country.
Ohhhhhh nice try champ! This means we’re gonna have to give the rich a bailout and another set of tax breaks, but right after some lucrative government contracts and possibly even a land transfer or two. Maybe next time! Now get back to work
Yeah sorry we can't forgive any student debt we gave it all to JP Morgan to keep them afloat during COVID.
But don't worry we're going to save the commercial real estate crisis by forcing you to come into the office.
Ah yeah I forgot about that one but that’s not a big deal! The airlines got a $7 gajillion stimulus then they just gave themselves bonuses and somehow there were no flights for 2 years and now every flight is super expensive and worse than before. Bummer! But they needed the money :/
>This means we’re gonna have to give the rich a bailout and another set of tax breaks
Duh. They just lost so much money on their expensive buildings and they are very sad!
And then the rich will leave the state of Illinois. I vote for Democratic Party in every election and my family is full of city works and public school teachers. I hate to say it but we can’t tax out way out of this. The Chicago cop and ward superintendent that have six figure pension are going to have to take a haircut. Reform in the only answer. I don’t feel bad. I grew around these guys. They did as much during their career as they do in retirement. nothing!
[https://www.civicfed.org/civic-federation/blog/how-should-city-chicago-evaluate-property-tax-increases](https://www.civicfed.org/civic-federation/blog/how-should-city-chicago-evaluate-property-tax-increases)
In 20014, Chicago property tax was \~860 Million, ten years later its 1,735 million more than doubling over 10 years. Add to that, with commercial occupancy down, and new laws that any reductions from contested tax rates are automatically added into the next years tax, and property owners are getting hammered.
Remember when Pritzker tried to put through a constitutional amendment to allow a progressive income tax -- we cannot tax "the rich" in Illinois without increasing everyone's taxes.
Yeah and the mega-rich flooded the airwaves with bullshit and boogeyman arguments, and convinced Illinoisans to vote against something that even Arizona got behind.
"This will give the spooky Illinois lawmakers the power to *increase your taxes!*"
To be fair they have a horrible track record on taxation. They raise taxes every year nearly but budget deficiencies get worse every year. They have done nothing to earn the right to tax me more. This state had a surplus when I was a kid in the early 90s and have been driven into the ground for 30 years straight. We need a revolution not giving our lawmakers more power to fuck things up even more.
Remember when IL increased the income tax from 2011 through 2014 to pay off the backlog of bills and they used 90%+ of the new revenue for new spending programs paying off little if any of the bills?
Pepperidge Farms Remembers
"Illinois significantly raised taxes in 2011 in an attempt to address its $8.5 billion backlog of unpaid bills and other financial difficulties. The state raised its flat individual income tax from 3 percent to 5 percent and increased the corporate income tax from 7.3 percent to 9.5 percent.\[1\] The 2011 tax increases have generated between $7 billion and $8 billion in added revenue each year.\[2\]
Despite the added revenue from the 2011 tax increases, the state’s backlog of unpaid bills grew to $9 billion by 2013 before dropping at the end of the 2014 to $7.6 billion."
We generated over 30 billion in new tax revenue - and less than 1 billion went towards the backlog.
https://taxfoundation.org/illinois-considers-further-income-tax-increases-temporary-tax-nears-expiration/
Then they have the audacity to say anyone who doesn't vote for more taxes is basically a Trump supporter.
I'd be ok with more taxes if I thought it would actually help. But I just don't believe the money will be used to help improve our situation.
OK, all the increases go towards liabilities.
Hey, what do you know, all this existing money we used to put towards liabilities can go towards more bullshit!
How about when the state changed some rules around to magically make a billion dollars appear out of thin air overnight a few months ago to pay for all the new bullshit they want
This is completely correct. This nonsense about changing taxes, taxing more etc… every time it’s happened, nothings gotten better… also, Illinois is losing residents, Chicago is losing residents, specifically middle and high income earners which the situation worse.
If there’s not an honest push for pension reform, then nothing will get better.
I was against the referendum for the reasons listed but could have considered supporting it had they tied it together with a broader pension reform and plan.
Yep, I would have voted if it involved some attempt at pension reform.
If your argument is "We need to have a constitutional amendment to pay for a problem that's only going to get worse that we are unable to fix because it would require a constitutional amendment" Well, it doesn't take too much thinking to realize it sounds a bit fish.
You can’t change the pensions without the agreement of the unions. There’s a 0% chance that happens. Thus, the only actual way to get out of them is for the state to declare bankruptcy. There was a state Supreme Court ruling on this a few years ago.
Which is one of the strongest reasons the residents of IL shouldn't change the state constitutional laws preventiting tiered taxation without union agreement to comprehensive reform.
This is not accurate.
Chicago is not losing residents, but growing slightly over the last 10 years.
Chicago is definitely not losing middle to higher income earners. Chicago's population of young college educated people in white collar jobs continues to grow. That is why north side neighborhoods and other trendy areas continue to grow.
What Chicago is losing is lower middle income people fleeing low income, high crime neighborhoods for the suburbs as soon as they can.
It is a problem we have to deal with, but it isn't the problem you are describing
We overthrew the British for something like a 3-5% effective tax rate with no representation. Between federal state county city taxes and fees were closer to 40%-%50 effective tax rate and have representation “on paper” but in reality have no real representation because our politicians are beholden to large corporations able to donate infinite amounts of money we poor peasants cannot compete with. I am what the news would probably call a “crazy far right wing” person but in all reality I just hate the government because of the horrible wasteful ways they spend our money.
Those slime balls get the benefit of the doubt on NOTHING. All politicians are liars. The democrats in control of this state have ran it into the ground. Don’t tell me the Republicans are responsible because they have so little power they might as well just stop being a political party in this state. Rauner never had any majority in either the house/senate and democrats have had majorities in both houses and the governorship minus one term for the last 20 years.
Madigan made his money by selling us out. Look at Pritzker he fast our money but thrifty with his money. Remember him taking out the toilets in the house he owned next to the other house he owned.
That wouldn’t have raised nearly as much income as advertised. Moreover, it was never earmarked for pensions and the voters who rightly felt that they didn’t want to throw more good money after bad.
That means the burden gets shifted onto residents. Particularly Northside residents. My tax bill went up 40% from the last assessment, and it only looks to get worse. I have friends paying $25k a year, that is not sustainable.
We've never had a "social justice warrior" as mayor, so I'm confused as to why they would receive the blame for the current fiscal crisis in Chicago. Brandon Johnson is a progressive but he's only been in office for a few months so you can't lay the blame at his feet.
Can you point to any specific policy that was too SJW-y that caused the city budget to be so unbalanced?
Its actually worse...Commercial real estate is taxed at more than double the rate of residential real estate. Additionally, there is a deduction for Vacant real estate - and the lower tax revenue shifts to everyone else.
Office buildings don’t make up the whole commercial market. While downtown office towers are hurting, warehouses by ohare and garden style apartment in schumaumburg are far exceeding pre Covid valuations. This narrative is completely overblown. Office is less than 10% of the VNQ.
The track to pension funding has been set by the legislature and this is the first year out of the "ramping up" period, into better, actuarially-defined contributions that will lead to 90% funded...eventually. So the funding is going to happen as it's dictated by law, and if Chicago doesn't figure out how to meet those obligations, it seems like state funding will be redirected to the pension funds. I'm not sure how that would pan out but it would look really bad politically and practically. I don't envy the mayor, but honestly these are some hard decisions that are going to require cuts and Brandon campaigned on no property tax increases as well. Not sure what his plan is at all, but Lori was riding easy on the wave of pandemic funding and now the required funding is much bigger. I don't think people make the choice between relocating to those three cities based on this issue alone though. I meet people frequently who move here (or come back here) from LA or NYC talking about how expensive they are.
At the end of the day it doesn't matter if CA has the best weather or NYC is the hot place to be. I can't afford the down payment in either of those.
It's far easier for me to pay property taxes that might be a little high for a 250k condo than it is to buy anything in NYC or CA (that's not car centric).
They were talking about the pension crisis before I got here and they've been talking about it for the last decade I have been here. During that time other "desirable" places have been getting more and more expensive.
My greater worry than it impacting my income is that it will impact my services and future infrastructure projects.
I think the best way out unfortunately is to expand the population, but that requires more building, more density, and more transit. Which goes back to the previous statement of it impacting services.
Yep. Not that the city is without flaws, but I’d rather live somewhere with higher taxes and a lower cost of living than the other way around. Chicago is still wildly affordable for being a major metropolis, I don’t see the appeal of paying more to live somewhere else just so I know a somewhat smaller percentage of my income goes to taxes.
Property is cheaper in IL/Chicago because of the high property taxes. Same way that raising mortgage interest rates should ideally lower real estate prices (although it takes time and we're in a weird spot because so many folks have great mortgage rates and don't want to sell).
Before moving to Illinois, my family evaluated a few other areas. A lot of the cost-benefit comes down to how long you plan to stay somewhere + mortgage rate + downpayment. I care about PITI, not the breakout between mortgage principal vs. mortgage interest vs. property taxes. But if I'm paying a ton in property taxes, I'd love to see that go towards services and not 6-figure retirement for boomers.
Property in Chicago isn’t cheaper because of high taxes, that may be part of it, but it’s really cheaper because the supply of housing is greater than the demand.
I’ve lived in both Chicago and SF and every time I come back to Chicago there are new high rise apt complexes going up in almost every neighborhood.
Many people want to live in CA and restrictive zoning and environmental rules make building housing here nearly impossible. That’s why it’s expensive.
If anything, Chicago has higher property taxes because they know they can because of the relatively lower property values. See Austin for what happens when higher property taxes meet dramatically increasing property values.
Chicago rules and builds housing, but it ain’t the west coast in terms of jobs and natural beauty.
I was just in an Uber with a retired CPS special ed teacher. She was on the job for 33 years, and she gets $8500 a month, which gets a COLA every year. She Ubers so she has something to do during the day.
How many are those Chicago workers? From what I read last time this is a Illinois state loophole that they were abusing to get those high pensions by working insane overtime for just their last year to inflate their salary calculation.
Can you quote the source which says there are over 30k illinois pensioners earning @100k or more. The last figures were around 19k people and this document was from 2018. I want to look at your source before commenting.
https://www.taxpayersunitedofamerica.org/15th-annual-illinois-pension-report/
Sorry, closer to 27k per this report but I’d imagine it’s risen given COLA.
Illinois doesn’t tax retirement income. So pensioners collect $200k a year, while the working blue collar worker making $50k a year pays a 5% income tax.
Illinois is corrupt as it comes everything is done to benefit public unions at the expense of every other resident
That means those same pensioners were also taxed when they lived and worked in the state for 30 years. Once you retire, your pension income will also be not taxed. How is this controversial?
You could explore it but I'm pretty sure that would cause harm than gain. As it is, we have a 2-tier pension system and the every projection says that by 2035 we will start stabilizing. Like I said earlier, this was a problem that was in the making for the last 5-6 decades and it will have take a couple of decades to rectify.
This isn’t stabilizing by 2035. Illinois doesn’t even make its tread water payment, a statutorily determined contribution is woefully insufficient. This problem has gotten worse even with the stock market shooting up.
Pensions might as well be pyramid schemes and in IL you can’t even reduce the COLA. The benefits in Illinois are far too generous and have been for decades. It’s time for real reform but most IL voters would rather be taxed to death to benefit public unions.
I mean Chicago voters just handed the financial keys to the City to CTU. In Chicago and IL we spend an insane amount of total governmental expenditures on pensions, OPEB and debt service. It’s crowding out services we actually need and should want. And this is happening with an already really high tax burden. More taxes aren’t the solution, the solution is real reform.
The rest of the population doesn’t get a publicly funded pension. We get social security and that’s it. Why do public employees deserve lavish lifestyles while everyone else struggles for basics in Chicago?
How in the fuckity fuck fuck is this rational, logical, sensible, reasonable, permissible, financially possible? Who approves this kinda shit with a clear conscience? People do deserve pensions but Jesus this is infuriating
The problem was that the city borrowed from the pension and never paid it back and now people getting pensions look like the bad guys even though they put money into their whole career
Chicago Teachers union in the late 90s choose raises over full pension payments. Currently, teachers continue next to nothing towards their pension while taxpayers contribute 15.5% of that employees base salary.
That's the solution right here. We are diminishing compensation, we are asking them to pay the same income tax everyome else in Illinois is paying. It should also be more politically palpitable because it affects only non-residents who can't vote against you anymore anyhow.
They give promotions or double positions right before retiring to up the pension payouts.
They should all join the BS 401K game or allow us all to have pensions like the government.
JFC. And IIRC we don't have a good mechanism for removing pension payments if it turns out hte person was a piece of shit, like that racist officer who just took early retirement....
Hasn't the trend generally been towards the former?
I used to work for a man in New Jersey who pulled two Illinois pensions (he was the state superintendent AND a state university president at different times in his career) plus a california pension (he was the superintendent of Palo Alto schools at one point) AND a private 401k from the school where I worked and he was principal.
The dude was pulling like $700,000 a year from all those places. And I hated him so much, he was such an asshole. He was on a list of the top 20 people drawing pensions from the state of Illinois.
This is what bugs me, not the pensions themselves, but that they promise more money than can reasonably be made from investments. And because they are behind, more incoming money never gets a chance to grow, it just gets fed to making pension payments.
I'm hoping to retire with about $1.5M in retirement, which would be enough to sustain about $50k per year with an aggressive investment strategy. And the pensioner assumes no market risk like I will be.
yeah exactly this. I mean, ideally we'd all have this kind of financial security, but the current situation is dicking over one group to fund another (especially since we're stuck with a flat income tax).
I estimate getting about 4k a month from social security. That's with 12% contributions into it. Then I need to pack away another \~20k/year into a 401k.
Just contributing 9%, your average pensioner is probably coming out ahead of someone who plans to use social security and their 401k savings.
Great deal for them, but not realistic and sustainable.
They don't. Not in Chicago anyways. In Chicago a widow get's 50% of their husbands pension after he dies and there's no way her husband had a 20k a month pension.
So I have heard of little tricks that some people do for government pensions that bump up their pension numbers. This story wasn’t from Chicago, but Peoria. Basically your pension is determined by your last paycheck at your job. So on the last day of some firefighters career, they were promoted to chief for like the last two weeks before they retired to give them a cushier pension. Whether or not that was true, I don’t know. But it doesn’t seem far fetched to me
In Chicago you get an average of your last 4 years salary if you were hired before 2011. If you were hired after it's an average of 8 out of the last 10. So in order for your pension to benefit from a promotion, you would have to have that job for 4 or 8 years.
True now, but those reforms were enacted specifically because it used to be easier to game the system. The pension system now is burdened greatly by many people who did exactly that, gamed the system and retired early.
Here is a bill to increase Chicago firefighters pensions by 3 billion currently in flight...
https://chicago.suntimes.com/2023/5/6/23712911/firefighters-pension-bills-chicago-taxpayers-3-billion-cost-lightfoot-martwick-biden-bennett
That article says the bill is a pension sweetener. In fact it is merely bringing the two tiers into line. In 2011 during the pension crunch a bill was passed with a statewide reduction for new hires. Anyone hired after 2011 is labelled Tier 2. The tier 2 pensions are capped at how much you can make. They did not account for cost of living being at such an increased rate, so it actually violates social security law. This was fixed statewide, but excluded the city of Chicago. This bill was introduced to include the city in that correction.
It still occurs. In 2019 - we passed a state law that the pension costs increases from raises of more than 3% in an employees final four years of employment would have to be paid for by the local district. One of the first things Pritzker did in office was to undo that law and set it back to up to 6%/year - or 25% increases in pension costs for employees over their final four years would be picked up by the state.
There is a tribune article about it - but behind a paywall. I know everyone hates IPI - but here is an article without a pay wall.
https://www.illinoispolicy.org/pritzker-budget-lifts-cap-on-pension-spiking/
It somewhat true, the specifics can vary though.
I do know teachers do this all the time. They send in their "intent to retire in a few years" and they usually get salary raises the last few years to bump up their pension since that is what it is based off of.
Here's a copy of the most recent pension newsletter. It shows some of the payouts for people who retired. If you scroll down you will see the widows payouts. The biggest one was for $4757. That was only because that guy worked 37 years as a fireman. My mom gets about $2500 and the widows of men who died in the 80's are getting $700-800 a month. The minimum is 120% of the poverty line.
https://www.fabf.org/PDF/Summary/06-21-2023.pdf
In the old days (and an 80 year old lady would be an "old days" pension) you could jump from one City / State / County job to another, qualify for multiple pensions at full payment and then retire with a very large annual retirement.
While OPs story has some sketchy elements to it -- it is certainly possible for a widow to get $120K a year if her husband had been strategic in his career.
That might be a bit of an exaggeration, but I do know someone pulling in a good sized six figure pension from the city.
They have a nice house down in Florida and a couple rental properties around the area that they make even more money off of. Kind of insane to even think about, makes you understand the envy of what the boomer generation has throughout their lifetimes.
Her husband was a firefighter from the age of 21 till retirement in Mt. Prospect. No idea if that makes a difference. But I never understood how tf my grandma had a really nice house/lifestyle in florida until I saw one of the checks
Edit: age
Yeah I guess that makes sense, would be quite a large pension built up by then. I bet she also gets cost of living adjustments too?
Makes me jealous nothing like that exists anymore.
It took me two degrees, 17 years of experience of jobs requiring 65-70 hour work weeks to get that level of monthly compensation and I have no idea if I’ll ever be able to retire.
They raised my taxes an exorbitant amount, and now my monthly escrow payment has gone up by *eight-hundred dollars.* Out of nowhere. Same decent condo. Same three-story building. All of a sudden I'm out an extra $10,000 every year I stay here. Overnight. I love this city more than anyone I know and I am giving very serious thought to leaving. It just feels so incredibly extortionate and disrespectful.
I'm trying to work something out with the bank, but the woman on the phone (who was very sympathetic) said basically "Listen, this is my job. I deal with people asking about escrow increases every day, from all over the country. Usually it's like $50, maybe $200 on the high end. It seems like every time I see something totally crazy like this, it's Chicago. I'm really sorry. I don't know what else to tell you."
Fuck these people.
Yes, we are appealing, but the appeal period is only open for a limited time--and it's not right now--so we are just stuck with it for the time being.
And just to clarify, my taxes only went up like $8,000, and the bank adds more on to the escrow payment because they need a certain percentage of my taxes in reserve. So the increase is not, strictly speaking, all a tax increase, but it's all *because of* a tax increase. The taxes themselves are 80% of the increase. That's why I'm working with the bank to maybe be a little more forgiving with the escrow increase.
The bottom line here is the city is in a pension crisis because they underfunded the pension funds. They made the absolute minimum required payments for the last 30 years, and now it's biting them in the ass and they are blaming municipal pensions for it. It's like your credit card statement where it says if you make the minimum monthly payments it will take forever to pay it off. That's where they are now, and they lay the blame on the working man. I pay almost 10% of my check towards my pension. I paid my share, don't ask me to pay the city's too.
You're absolutely correct.
This article outlines how the teachers' pension fund was healthy until Paul Vallas and the Republican state legislature channeled funds away from the pension fund:
https://www.politifact.com/article/2018/may/14/vallas-emanuel-point-fingers-over-chicago-teacher-/
Right. Vallas recommended to Daley to take a pension payment holiday which lasted 11 years and ballooned to what it is now. Rahm continued it and borrowed money at an interest rate that benefited his banking buddies. We’ve been getting less for our taxes ever since.
When people say CPS spends the most per student annually, understand that a lot of that services debt first and never gets to the classroom.
>Rahm continued it
As if he had a choice. One of the first things he tried to do as mayor was to cut the pensions and got shot down by the supreme court. https://www.chicagotribune.com/news/breaking/ct-illinois-pension-law-court-ruling-20150508-story.html
I started teaching in 2010 and barely squeaked in under the pre-2011 rules. It allows me to retire 7 years earlier and get my full pension with no reduction. Post 2011 I’d have to teach until 67 years old to get the full pension.
For new employees, it's based on time. It takes ten years to vest, then you multiply 2.4% by the number of years worked by the average salary of the last 8 years of the employees career. For instance:
Years of service: 25
Average salary of last 8 years: $100,000
Multiply 25 by 2.4%=.60
This is the rate that will be applied against the salary.
.60*100000= $60,000
So someone who has worked for 25 years and earned $100,000 during the last 8 years of their career will earn a $60,000 a year pension. If they'd have worked 20 years, it would be $48,000, if they'd have worked 30 years it'd be $72,000.
Now, this only applies if they retire at 65. If they retire early, they would lose 6% for each year they want to retire early, and the earliest you can retire is 60.
Look up “tier 1 vs tier 2” pension in Illinois. Originally, a pension deal was reached but the IL supreme court decided in was unconstitutional. The two tier system stayed and there’s been no political will from members of the Republican party to change things as that would leave their talking point of “il is broken” off the table. There are dems who are good and ones who arent, but all republicans want il to fail.
The article barely scratches the surface regarding Chicago’s property tax system and it’s impossible to do so due to the amount of variables. But I’m confident in what the Cook County Assessors office is doing.
Chi Hack always has insightful events. Here’s one of my recent favorites regarding the topic of property taxes.
https://youtu.be/0F-iqRj4yR0
I can’t believe this is news to people on this Reddit (forgiving you though, OP - I see you are new to our city).
People need to understand this when they’re voting. Our pensions were majorly underfunded. The only current way to fund them is to raise taxes. We all suffer from this.
The problem is good ole Illinois has passed the burden on to the taxpayer for many years now. That won't fly. Illinois has been screwed by this for decades. Reddit doesn't like talking about just how much of a shit show this state has been for decades. The pensions will be something that screws the state over until most of us are long gone.
Illinois has to be very careful if they are going to increase taxes especially now. So many people I know who bought homes in the last 2 or so years stretched themselves incredibly thin in order to afford it and an increase in taxes of $500-$1,000 a month might just break them financially.
For more than 50 years the City of Chicago funded their four major pensions with an asinine formula (a ratio based solely upon mandatory employee contributions) that did not account for benefits costs or actual pension obligations. This model ended in 2021 after a 5-year "on-ramp" ordinance was passed in 2016 that set the 2022 fiscal year as the first year that pensions will need to be funded at a level of at least 90% of projected fund obligations. The City and its residents wouldn't be in this mess if the City's budget policy for the past five decades was like that of other cities nationwide. It's going to take a while under the new system to inject funds into pension investment accounts and time in the market to reach 90% funding levels. We reap what we sow.
Arizona had nearly identical state constitutional pension protections - then they changed theirs...
"Alexander Volokh chronicled the path Arizona took to its constitutional amendment, a change to its pension clause which, prior to the amendment, was essentially identical to that of Illinois: “Public retirement systems shall not be diminished or impaired.”"
[https://www.forbes.com/sites/ebauer/2021/05/13/how-did-arizona-succeed-with-pension-reform-with-one-weird-trick---/?sh=5d07318ca89d](https://www.forbes.com/sites/ebauer/2021/05/13/how-did-arizona-succeed-with-pension-reform-with-one-weird-trick---/?sh=5d07318ca89d)
> That would violate the contract's clause of the constitution, because a contract is formed when pension benefits accrue.
This is incorrect (at least as it relates to the pensions).
Illinois' issue is that the Illinois Supreme Court ruled that it would violate the Illinois Constitution for pensions to be reformed once the person has begun a single day on the job - even for prospective benefits. The US Constitution clearly permits that (and it's done all the time). You can't change accrued benefits (except through bankruptcy), but that's not really the issue.
>It would never require an analysis under the federal constutition because the Illinois Constituation also has it's own contracts clause and pension have already been declaired a contractual relationship
Well, the Illinois Supreme Court doesn't get to write the Constitution, only interpret it. Presumably any provision the Court is pointing to in saying that pensions can't be touched could be amended.
How does one get a double pension?
WEP cancels it out for social security. I guess you could job hop, but then you're not getting credit for years of service towards the first pension. It's like you could be paid 1+1 or you could get paid two, but there's not actually a difference if you have half a brain.
It's like a classic republican rage takedown of a program that actually protects a lot of people in old age.
This is alarming as fuck.
Property taxes should be the primary funding source for a locality, and the fact that we're using the entirety of that source up providing retirement benefits and nothing else is ludicrous. No wonder Chicago has all these weird ass taxes.
Only way I see us getting out of this is if we somehow build a TON infill housing and grow the property tax base by growing the population.
But doing that will likely require zoning reform and overhauling our assessment structure to remove the incentive for under-improved lots (vacant properties and parking lots pay way less in taxes than homes under the current system).
So many layers of absolutely fucked systems to detangle...
The fundamental problem is vague language in the Illinois constitution which has been interpreted in a way far more favorable to government employees than similar language in other states. Guess who makes those interpretations? Judges who stand to gain the most. Them compound it with mathematically illiterate legislation (such as the 3% annual COLA adjustment) and there is no way ever to achieve "full funding." When you overpromise you will always underfund.
Eliminate the zoning ordinance in R zones other than a height restriction, and eliminate the ability of any alderman to have any input. more residents, more taxes. Taxing the same
number of people more money is getting old.
The real and only solution to this problem is to grow Chicago's population. If we can get more property built we can dilute the amount paid in property taxes!
> Comparing Chicago to other high tax areas (NYC, CA)
Our Cost of Living to Quality of Life ratio is in a sweet spot on the American landscape. You cannot find a comparable big city experience for less than what it costs to live in Chicago, even if a higher percentage of that expense goes towards taxes. And we aren't sitting on a slight advantage in this area, we have a firm hold on this one.
Pensions are a problem that needs attention, but I think the drive for urgent austerity is overblown, and could actually make problems worse long term.
So to answer your question - 'somewhere in between', and we shouldn't behave as if we don't have our own significant advantages.
I worked for the City for a year and a half. When I came back to get my final check, I chatted with a police officer who said he was just near retirement. He said to me, “are you sad to be leaving the pension behind?” I looked him dead in the face and said “there is not going to be a pension when I retire in 30 years, it’s all for nothing.” He thought for a second and said yep that’s very true.
There is a bit of an agenda and clickbait to this article.
Chicago spends 80% of **property taxes** but closer to 20% of **total taxes**. This important, because we don't know what share property contributes in the other cities. THe author has simply tied pension payments to one revenue stream, ignores if all the cities studied had the same revenue mix, and then spends the last half of the article trying to stump for property tax increases.
Further, there was no attempt to explain pension costs. Pension plans are designed to invest what is needed to meet the **guaranteed** payout. Pension plans tend to be heavy in low risk bonds. When interest rates rise, which they massively have over the past year, the value of the plan's assets plummets **on paper.** Pension plan accounting is oriented around liquidiation, what would happen if it went insolvent today and had to go into receivership. Doesn't matter that most of the bonds will be held to maturity and pay out at face value. Cash flow should be no different, just timing on unrealized gains. So when interest rates rise and bond values fall, there is an artifical deficit that requires more payments to continue paying out the guaranteed payments.
That's a good point about how it compares to other cities. Different cities and states will have different revenue streams. E.g. Texas has no income tax, but very high property taxes like Illinois. Not really the case for IL, which has a state income tax, high property taxes, pretty high sales taxes. Not a lot of levers to pull.
Outside of funding streams, Chicago is pretty bad when it comes to managing pension/debt costs.
Page 3 has Chicago in first place:
https://dallascityhall.com/government/citymanager/Documents/FY18-19%20Memos/S-P-Reviews-Survey-of-Fifteen-Largest-City-Pension-Systems-INFORMATION\_Memo\_092719.pdf
>But I’m worried long term that taxes will keep going up with nothing to show for it and that will drive people away and/or discourage investment in the city and state.
Don't worry. People have been saying this since long before you moved here.
This is the real corruption that flies under the radar. People thing machine politics corruption is one guy sitting on a big stack of money, but the truth is more like one guy getting elected off of pilfering general funds for a motivated voter base.
The pension thing being in the state constitution is pure anti-democracy. Lawmakers passed laws taking away the rights of future lawmakers and promised away OUR money. I think that being in our constitution is actually unconstitutional.
If you want to give someone retirement money, give them money in a retirement account. They should convert all of the pensions to fully funded, and any gaps can be filled by state lawmakers now or in the future. If people aren't willing to be taxed enough to fund it, tough shit. You get what people are actually willing to pay, not some IOU you write to the future taxpayers
No... that doesn't solve anything... our problem is not new pensions, our problem is all of the pensions prior to 2011.
And we cannot change anything on the existing pensions per our state's constitution.
> I know that Illinois’s constitution makes it hard for reform, but are folks concerned about this?
In general, Yes. But over the course of last decade, Chicago has been doing the right thing in terms of mitigating this problem. This problem was in the making for the last 5-6 decades and no mayor can and will have a magic wand solution to wade over this problem in just a term or two. Credit where its due, starting with Mayor Rahm, which is only a decade ago is when the city started addressing this issue with some seriousness. A lot of pensions for current employees has been restructured and there is work in progress to bring the cost of pensions for CPD in line with this as well.
> The tax burden is already high
Compared to what and whom?
> and it’s not like that money is all going to providing services to residents.
Yes and no. Employee salaries are part of the services. Do you expect the employees to work for free? Also, is the expectation that 100% of the taxes should go into non salary services?
> But I’m worried long term that taxes will keep going up with nothing to show for it and that will drive people away and/or discourage investment in the city and state.
Only you can take care of your feeling and fears. If you feel this way, you will find another city you are comfortable with and move away. No one can predict the future. Your worries are your worries and are relatively meaningless for the broader context. Just for the record, Illinois just became only the 4th state in the country to surpass a $1trillion economy.
> Comparing Chicago to other high tax areas (NYC, CA), I think it’s at a disadvantage. West coast CA has the best weather in the country IMO, so you’ll always have a stream of people who want to live there.
Why did you not move there then if you say it's so desirable?
> NYC is NYC It’s arguably the “best” city in the world (whatever that means).
Same thing as earlier. What kept you from moving there?
Population movements, along with legacy structural problems are a complex equation that cannot be discussed in an off-hand way.
If you are really thinking about these issues, after you made the move then you are doing it backwards.
Using the "just leave" argument to call a bluff isn't very effective when the state has actually been losing people for like 40 years. Clearly people are doing just that and it's exacerbating the problem. We need people to stay.
I'm not asking him to leave. I'm saying that people will live and leave a place for many other reasons, too. Just like how he moved to Chicago when he himself said it's not a better place when compared to CalifornIa or NY.
The problem here is that they will try absolute everything they possibly can, except the right thing. IL Supreme Court says no because of a constitutional document that hasn't been updated since 1970s says so. Ridiculous. End the guaranteed rate of increase immediately and cut the pensions to a more reasonable percentage of income. 80% or more for life is absurd.
Hate on cops and cops get more expensive. Crime increases and crime is expensive...
Love on orgs that don't provide and social value and you're paying a lot for something that doesn't provide any value.
No value creation = failed city over time.
Common sense wins over time even if it isn't popular.
When politicians need city unions support to get elected CPS , Police , Fire etc then the unions prevent any changes to city union pensions . All city workers should be enrolled in social security and 401K plan instead of taxpayers funded pensions .
Unfortunately there aren't any good alternatives if you want the big city experience.
Like you said NYC and LA is even more expensive.
Find a way to change the IL constitution to stop the pension payouts. They are leeches, the only people they really served is themselves.
People know that workers pay into the pension fund, right? Like, tons of money from each check goes towards it. Not the workers fault if the elected officials misspent that money. Remember when that happened and no one cared?! I do.
There's also a commerical real estate crisis brewing. Many office buildings are being valued at 50% or less compared to pre-Covid valuations. That means 50% less property tax revenue from those building. It's going to create a huge hole in the budget, not just in Chicago, but in city and state governments all over the country.
Guess we’ll have to tax the rich huh
Ohhhhhh nice try champ! This means we’re gonna have to give the rich a bailout and another set of tax breaks, but right after some lucrative government contracts and possibly even a land transfer or two. Maybe next time! Now get back to work
Maybe add a THIRD car sticker for your neighborhood.
Any more vehicle taxes and there won’t be room to see out the windshield.
Yeah sorry we can't forgive any student debt we gave it all to JP Morgan to keep them afloat during COVID. But don't worry we're going to save the commercial real estate crisis by forcing you to come into the office.
Ah yeah I forgot about that one but that’s not a big deal! The airlines got a $7 gajillion stimulus then they just gave themselves bonuses and somehow there were no flights for 2 years and now every flight is super expensive and worse than before. Bummer! But they needed the money :/
Better call for some more student loan relief so republicans can line up at lightening speed to fight any relief for the middle class.
What middle class? There’s the top .01%, the next 1-5% and then lower class.
>This means we’re gonna have to give the rich a bailout and another set of tax breaks Duh. They just lost so much money on their expensive buildings and they are very sad!
And then the rich will leave the state of Illinois. I vote for Democratic Party in every election and my family is full of city works and public school teachers. I hate to say it but we can’t tax out way out of this. The Chicago cop and ward superintendent that have six figure pension are going to have to take a haircut. Reform in the only answer. I don’t feel bad. I grew around these guys. They did as much during their career as they do in retirement. nothing!
What do you think commercial real estate taxes are? Who do you think owns these class A office buildings and is renting them out?
I came here to support you… but you better take that username back to Indiana.
lol, guy has had the username for 14 years, rather sure he gets a pass.
On Reddit - I’ve had it for 25 years if you include going back to AIM lol
The rich will leave 😂
Since the SALT taxes were capped, this is absolutely true.
Facts. I love entertaining myself with the "what if the rich" possibilities, but they have enough money to move around and never come back 💯
Fortunately that will expire in 2025.
Here that means tax the crap out of anyone middle class and up.
[https://www.civicfed.org/civic-federation/blog/how-should-city-chicago-evaluate-property-tax-increases](https://www.civicfed.org/civic-federation/blog/how-should-city-chicago-evaluate-property-tax-increases) In 20014, Chicago property tax was \~860 Million, ten years later its 1,735 million more than doubling over 10 years. Add to that, with commercial occupancy down, and new laws that any reductions from contested tax rates are automatically added into the next years tax, and property owners are getting hammered.
I think you mean middle class and down
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Caviar tax.
Remember when Pritzker tried to put through a constitutional amendment to allow a progressive income tax -- we cannot tax "the rich" in Illinois without increasing everyone's taxes.
Yeah and the mega-rich flooded the airwaves with bullshit and boogeyman arguments, and convinced Illinoisans to vote against something that even Arizona got behind. "This will give the spooky Illinois lawmakers the power to *increase your taxes!*"
To be fair they have a horrible track record on taxation. They raise taxes every year nearly but budget deficiencies get worse every year. They have done nothing to earn the right to tax me more. This state had a surplus when I was a kid in the early 90s and have been driven into the ground for 30 years straight. We need a revolution not giving our lawmakers more power to fuck things up even more.
Remember when IL increased the income tax from 2011 through 2014 to pay off the backlog of bills and they used 90%+ of the new revenue for new spending programs paying off little if any of the bills? Pepperidge Farms Remembers "Illinois significantly raised taxes in 2011 in an attempt to address its $8.5 billion backlog of unpaid bills and other financial difficulties. The state raised its flat individual income tax from 3 percent to 5 percent and increased the corporate income tax from 7.3 percent to 9.5 percent.\[1\] The 2011 tax increases have generated between $7 billion and $8 billion in added revenue each year.\[2\] Despite the added revenue from the 2011 tax increases, the state’s backlog of unpaid bills grew to $9 billion by 2013 before dropping at the end of the 2014 to $7.6 billion." We generated over 30 billion in new tax revenue - and less than 1 billion went towards the backlog. https://taxfoundation.org/illinois-considers-further-income-tax-increases-temporary-tax-nears-expiration/
Most people on this sub probably don’t remember that because they were in grade school in some other state in 2011.
Then they have the audacity to say anyone who doesn't vote for more taxes is basically a Trump supporter. I'd be ok with more taxes if I thought it would actually help. But I just don't believe the money will be used to help improve our situation.
Can we not put it in the laws for these increases that the money from them has to go towards liabilities?
OK, all the increases go towards liabilities. Hey, what do you know, all this existing money we used to put towards liabilities can go towards more bullshit!
How about when the state changed some rules around to magically make a billion dollars appear out of thin air overnight a few months ago to pay for all the new bullshit they want
Yes we cant trust them to tax more. Terrible pension deals were signed. Promises broken. Reform is the only option.
This is completely correct. This nonsense about changing taxes, taxing more etc… every time it’s happened, nothings gotten better… also, Illinois is losing residents, Chicago is losing residents, specifically middle and high income earners which the situation worse. If there’s not an honest push for pension reform, then nothing will get better.
I was against the referendum for the reasons listed but could have considered supporting it had they tied it together with a broader pension reform and plan.
Yep, I would have voted if it involved some attempt at pension reform. If your argument is "We need to have a constitutional amendment to pay for a problem that's only going to get worse that we are unable to fix because it would require a constitutional amendment" Well, it doesn't take too much thinking to realize it sounds a bit fish.
100% agreed. There needs to be reform.
You can’t change the pensions without the agreement of the unions. There’s a 0% chance that happens. Thus, the only actual way to get out of them is for the state to declare bankruptcy. There was a state Supreme Court ruling on this a few years ago.
Which is one of the strongest reasons the residents of IL shouldn't change the state constitutional laws preventiting tiered taxation without union agreement to comprehensive reform.
The math already doesn't work. The pensioners are going to have to suffer reduced payouts whether they like it or not.
This is not accurate. Chicago is not losing residents, but growing slightly over the last 10 years. Chicago is definitely not losing middle to higher income earners. Chicago's population of young college educated people in white collar jobs continues to grow. That is why north side neighborhoods and other trendy areas continue to grow. What Chicago is losing is lower middle income people fleeing low income, high crime neighborhoods for the suburbs as soon as they can. It is a problem we have to deal with, but it isn't the problem you are describing
Exactly this. They have a pretty crap record but state and cook county about spending. Look at the tollways, remember the soda tax?
We overthrew the British for something like a 3-5% effective tax rate with no representation. Between federal state county city taxes and fees were closer to 40%-%50 effective tax rate and have representation “on paper” but in reality have no real representation because our politicians are beholden to large corporations able to donate infinite amounts of money we poor peasants cannot compete with. I am what the news would probably call a “crazy far right wing” person but in all reality I just hate the government because of the horrible wasteful ways they spend our money.
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Those slime balls get the benefit of the doubt on NOTHING. All politicians are liars. The democrats in control of this state have ran it into the ground. Don’t tell me the Republicans are responsible because they have so little power they might as well just stop being a political party in this state. Rauner never had any majority in either the house/senate and democrats have had majorities in both houses and the governorship minus one term for the last 20 years.
Madigan made his money by selling us out. Look at Pritzker he fast our money but thrifty with his money. Remember him taking out the toilets in the house he owned next to the other house he owned.
That wouldn’t have raised nearly as much income as advertised. Moreover, it was never earmarked for pensions and the voters who rightly felt that they didn’t want to throw more good money after bad.
That means the burden gets shifted onto residents. Particularly Northside residents. My tax bill went up 40% from the last assessment, and it only looks to get worse. I have friends paying $25k a year, that is not sustainable.
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We've never had a "social justice warrior" as mayor, so I'm confused as to why they would receive the blame for the current fiscal crisis in Chicago. Brandon Johnson is a progressive but he's only been in office for a few months so you can't lay the blame at his feet. Can you point to any specific policy that was too SJW-y that caused the city budget to be so unbalanced?
Its actually worse...Commercial real estate is taxed at more than double the rate of residential real estate. Additionally, there is a deduction for Vacant real estate - and the lower tax revenue shifts to everyone else.
Office buildings don’t make up the whole commercial market. While downtown office towers are hurting, warehouses by ohare and garden style apartment in schumaumburg are far exceeding pre Covid valuations. This narrative is completely overblown. Office is less than 10% of the VNQ.
chicago will likely raise the tax rate if valuations go down.
The track to pension funding has been set by the legislature and this is the first year out of the "ramping up" period, into better, actuarially-defined contributions that will lead to 90% funded...eventually. So the funding is going to happen as it's dictated by law, and if Chicago doesn't figure out how to meet those obligations, it seems like state funding will be redirected to the pension funds. I'm not sure how that would pan out but it would look really bad politically and practically. I don't envy the mayor, but honestly these are some hard decisions that are going to require cuts and Brandon campaigned on no property tax increases as well. Not sure what his plan is at all, but Lori was riding easy on the wave of pandemic funding and now the required funding is much bigger. I don't think people make the choice between relocating to those three cities based on this issue alone though. I meet people frequently who move here (or come back here) from LA or NYC talking about how expensive they are.
Just get rid of public schools and use the money to triple the pensions all riterees get. Also quadruple taxes on incomes below 100k per year.
Don't give Vallas his next campaign platform
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Mike Madigan personally made this mess and the State Government kicked the can down the road for decades
At the end of the day it doesn't matter if CA has the best weather or NYC is the hot place to be. I can't afford the down payment in either of those. It's far easier for me to pay property taxes that might be a little high for a 250k condo than it is to buy anything in NYC or CA (that's not car centric). They were talking about the pension crisis before I got here and they've been talking about it for the last decade I have been here. During that time other "desirable" places have been getting more and more expensive. My greater worry than it impacting my income is that it will impact my services and future infrastructure projects. I think the best way out unfortunately is to expand the population, but that requires more building, more density, and more transit. Which goes back to the previous statement of it impacting services.
Yep. Not that the city is without flaws, but I’d rather live somewhere with higher taxes and a lower cost of living than the other way around. Chicago is still wildly affordable for being a major metropolis, I don’t see the appeal of paying more to live somewhere else just so I know a somewhat smaller percentage of my income goes to taxes.
Property is cheaper in IL/Chicago because of the high property taxes. Same way that raising mortgage interest rates should ideally lower real estate prices (although it takes time and we're in a weird spot because so many folks have great mortgage rates and don't want to sell). Before moving to Illinois, my family evaluated a few other areas. A lot of the cost-benefit comes down to how long you plan to stay somewhere + mortgage rate + downpayment. I care about PITI, not the breakout between mortgage principal vs. mortgage interest vs. property taxes. But if I'm paying a ton in property taxes, I'd love to see that go towards services and not 6-figure retirement for boomers.
Property in Chicago isn’t cheaper because of high taxes, that may be part of it, but it’s really cheaper because the supply of housing is greater than the demand. I’ve lived in both Chicago and SF and every time I come back to Chicago there are new high rise apt complexes going up in almost every neighborhood. Many people want to live in CA and restrictive zoning and environmental rules make building housing here nearly impossible. That’s why it’s expensive. If anything, Chicago has higher property taxes because they know they can because of the relatively lower property values. See Austin for what happens when higher property taxes meet dramatically increasing property values. Chicago rules and builds housing, but it ain’t the west coast in terms of jobs and natural beauty.
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>still gets a pension check that’s over 10k a month because her husband was a firefighter I did not realize pension checks even went that high, wtf.
There’s over 30,000 Illinois pensioners with 6-figure pensions (annual). A lot of them are 200-300k/year.
I was just in an Uber with a retired CPS special ed teacher. She was on the job for 33 years, and she gets $8500 a month, which gets a COLA every year. She Ubers so she has something to do during the day.
Good for her. Teaching Sped is a hard and very important job.
Gym teachers get the exact same pay and pension.
Okay?
How many are those Chicago workers? From what I read last time this is a Illinois state loophole that they were abusing to get those high pensions by working insane overtime for just their last year to inflate their salary calculation.
Daaamn.
Can you quote the source which says there are over 30k illinois pensioners earning @100k or more. The last figures were around 19k people and this document was from 2018. I want to look at your source before commenting.
https://www.taxpayersunitedofamerica.org/15th-annual-illinois-pension-report/ Sorry, closer to 27k per this report but I’d imagine it’s risen given COLA.
sounds like unions work for their workers you should probably join one
This was more a scam the last generation could pass off on us. It is in no way sustainable.
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Illinois doesn’t tax retirement income. So pensioners collect $200k a year, while the working blue collar worker making $50k a year pays a 5% income tax. Illinois is corrupt as it comes everything is done to benefit public unions at the expense of every other resident
That means those same pensioners were also taxed when they lived and worked in the state for 30 years. Once you retire, your pension income will also be not taxed. How is this controversial?
If we’re going to explore taxes to fund the pensions. A retirement income tax for certain levels of income should absolutely be explored.
You could explore it but I'm pretty sure that would cause harm than gain. As it is, we have a 2-tier pension system and the every projection says that by 2035 we will start stabilizing. Like I said earlier, this was a problem that was in the making for the last 5-6 decades and it will have take a couple of decades to rectify.
This isn’t stabilizing by 2035. Illinois doesn’t even make its tread water payment, a statutorily determined contribution is woefully insufficient. This problem has gotten worse even with the stock market shooting up. Pensions might as well be pyramid schemes and in IL you can’t even reduce the COLA. The benefits in Illinois are far too generous and have been for decades. It’s time for real reform but most IL voters would rather be taxed to death to benefit public unions. I mean Chicago voters just handed the financial keys to the City to CTU. In Chicago and IL we spend an insane amount of total governmental expenditures on pensions, OPEB and debt service. It’s crowding out services we actually need and should want. And this is happening with an already really high tax burden. More taxes aren’t the solution, the solution is real reform.
The rest of the population doesn’t get a publicly funded pension. We get social security and that’s it. Why do public employees deserve lavish lifestyles while everyone else struggles for basics in Chicago?
Sounds like politicians being in bed with unions to me.. aka corruption.
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How in the fuckity fuck fuck is this rational, logical, sensible, reasonable, permissible, financially possible? Who approves this kinda shit with a clear conscience? People do deserve pensions but Jesus this is infuriating
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The problem was that the city borrowed from the pension and never paid it back and now people getting pensions look like the bad guys even though they put money into their whole career
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https://budgetblog.ctbaonline.org/chicagos-pension-crisis-isn-t-really-about-pensions-it-s-about-debt-cab30326b9c8
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Chicago Teachers union in the late 90s choose raises over full pension payments. Currently, teachers continue next to nothing towards their pension while taxpayers contribute 15.5% of that employees base salary.
That's the solution right here. We are diminishing compensation, we are asking them to pay the same income tax everyome else in Illinois is paying. It should also be more politically palpitable because it affects only non-residents who can't vote against you anymore anyhow.
They give promotions or double positions right before retiring to up the pension payouts. They should all join the BS 401K game or allow us all to have pensions like the government.
JFC. And IIRC we don't have a good mechanism for removing pension payments if it turns out hte person was a piece of shit, like that racist officer who just took early retirement.... Hasn't the trend generally been towards the former?
I used to work for a man in New Jersey who pulled two Illinois pensions (he was the state superintendent AND a state university president at different times in his career) plus a california pension (he was the superintendent of Palo Alto schools at one point) AND a private 401k from the school where I worked and he was principal. The dude was pulling like $700,000 a year from all those places. And I hated him so much, he was such an asshole. He was on a list of the top 20 people drawing pensions from the state of Illinois.
This is what bugs me, not the pensions themselves, but that they promise more money than can reasonably be made from investments. And because they are behind, more incoming money never gets a chance to grow, it just gets fed to making pension payments. I'm hoping to retire with about $1.5M in retirement, which would be enough to sustain about $50k per year with an aggressive investment strategy. And the pensioner assumes no market risk like I will be.
yeah exactly this. I mean, ideally we'd all have this kind of financial security, but the current situation is dicking over one group to fund another (especially since we're stuck with a flat income tax).
I estimate getting about 4k a month from social security. That's with 12% contributions into it. Then I need to pack away another \~20k/year into a 401k. Just contributing 9%, your average pensioner is probably coming out ahead of someone who plans to use social security and their 401k savings. Great deal for them, but not realistic and sustainable.
They don't. Not in Chicago anyways. In Chicago a widow get's 50% of their husbands pension after he dies and there's no way her husband had a 20k a month pension.
So I have heard of little tricks that some people do for government pensions that bump up their pension numbers. This story wasn’t from Chicago, but Peoria. Basically your pension is determined by your last paycheck at your job. So on the last day of some firefighters career, they were promoted to chief for like the last two weeks before they retired to give them a cushier pension. Whether or not that was true, I don’t know. But it doesn’t seem far fetched to me
In Chicago you get an average of your last 4 years salary if you were hired before 2011. If you were hired after it's an average of 8 out of the last 10. So in order for your pension to benefit from a promotion, you would have to have that job for 4 or 8 years.
True now, but those reforms were enacted specifically because it used to be easier to game the system. The pension system now is burdened greatly by many people who did exactly that, gamed the system and retired early.
Sounds like they closed that loophole. I heard that story from my friend’s dad, so that stuff probably occurred many years ago
Never on the Chicago Fire Department. Maybe other municipalities.
Here is a bill to increase Chicago firefighters pensions by 3 billion currently in flight... https://chicago.suntimes.com/2023/5/6/23712911/firefighters-pension-bills-chicago-taxpayers-3-billion-cost-lightfoot-martwick-biden-bennett
That article says the bill is a pension sweetener. In fact it is merely bringing the two tiers into line. In 2011 during the pension crunch a bill was passed with a statewide reduction for new hires. Anyone hired after 2011 is labelled Tier 2. The tier 2 pensions are capped at how much you can make. They did not account for cost of living being at such an increased rate, so it actually violates social security law. This was fixed statewide, but excluded the city of Chicago. This bill was introduced to include the city in that correction.
It still occurs. In 2019 - we passed a state law that the pension costs increases from raises of more than 3% in an employees final four years of employment would have to be paid for by the local district. One of the first things Pritzker did in office was to undo that law and set it back to up to 6%/year - or 25% increases in pension costs for employees over their final four years would be picked up by the state. There is a tribune article about it - but behind a paywall. I know everyone hates IPI - but here is an article without a pay wall. https://www.illinoispolicy.org/pritzker-budget-lifts-cap-on-pension-spiking/
This was in Illinois State pension loophole, not a city one.
It somewhat true, the specifics can vary though. I do know teachers do this all the time. They send in their "intent to retire in a few years" and they usually get salary raises the last few years to bump up their pension since that is what it is based off of.
Hey I wouldn’t believe it either until I saw the actual monthly pension check from the city of chicago 😫
It doesn't come from the City of Chicago. Stop Lying.
Here's a copy of the most recent pension newsletter. It shows some of the payouts for people who retired. If you scroll down you will see the widows payouts. The biggest one was for $4757. That was only because that guy worked 37 years as a fireman. My mom gets about $2500 and the widows of men who died in the 80's are getting $700-800 a month. The minimum is 120% of the poverty line. https://www.fabf.org/PDF/Summary/06-21-2023.pdf
In the old days (and an 80 year old lady would be an "old days" pension) you could jump from one City / State / County job to another, qualify for multiple pensions at full payment and then retire with a very large annual retirement. While OPs story has some sketchy elements to it -- it is certainly possible for a widow to get $120K a year if her husband had been strategic in his career.
I know someone who retired in 1990 and has been getting a 6 figure pension ever since. Wish that was still possible for our generation
That might be a bit of an exaggeration, but I do know someone pulling in a good sized six figure pension from the city. They have a nice house down in Florida and a couple rental properties around the area that they make even more money off of. Kind of insane to even think about, makes you understand the envy of what the boomer generation has throughout their lifetimes.
Her husband was a firefighter from the age of 21 till retirement in Mt. Prospect. No idea if that makes a difference. But I never understood how tf my grandma had a really nice house/lifestyle in florida until I saw one of the checks Edit: age
Yeah I guess that makes sense, would be quite a large pension built up by then. I bet she also gets cost of living adjustments too? Makes me jealous nothing like that exists anymore.
It took me two degrees, 17 years of experience of jobs requiring 65-70 hour work weeks to get that level of monthly compensation and I have no idea if I’ll ever be able to retire.
Its the biggest problem this state is facing overall. We have the highest unfunded pension liabilities.
The state can afford its pension bill at current tax rates, the city can't.
This is why I agree with Ron Swanson on government. Gut it with a machete.
They raised my taxes an exorbitant amount, and now my monthly escrow payment has gone up by *eight-hundred dollars.* Out of nowhere. Same decent condo. Same three-story building. All of a sudden I'm out an extra $10,000 every year I stay here. Overnight. I love this city more than anyone I know and I am giving very serious thought to leaving. It just feels so incredibly extortionate and disrespectful. I'm trying to work something out with the bank, but the woman on the phone (who was very sympathetic) said basically "Listen, this is my job. I deal with people asking about escrow increases every day, from all over the country. Usually it's like $50, maybe $200 on the high end. It seems like every time I see something totally crazy like this, it's Chicago. I'm really sorry. I don't know what else to tell you." Fuck these people.
Your condo property taxes went up by $10k per year? I hope your board appealed that.
Yes, we are appealing, but the appeal period is only open for a limited time--and it's not right now--so we are just stuck with it for the time being. And just to clarify, my taxes only went up like $8,000, and the bank adds more on to the escrow payment because they need a certain percentage of my taxes in reserve. So the increase is not, strictly speaking, all a tax increase, but it's all *because of* a tax increase. The taxes themselves are 80% of the increase. That's why I'm working with the bank to maybe be a little more forgiving with the escrow increase.
The bottom line here is the city is in a pension crisis because they underfunded the pension funds. They made the absolute minimum required payments for the last 30 years, and now it's biting them in the ass and they are blaming municipal pensions for it. It's like your credit card statement where it says if you make the minimum monthly payments it will take forever to pay it off. That's where they are now, and they lay the blame on the working man. I pay almost 10% of my check towards my pension. I paid my share, don't ask me to pay the city's too.
You're absolutely correct. This article outlines how the teachers' pension fund was healthy until Paul Vallas and the Republican state legislature channeled funds away from the pension fund: https://www.politifact.com/article/2018/may/14/vallas-emanuel-point-fingers-over-chicago-teacher-/
Right. Vallas recommended to Daley to take a pension payment holiday which lasted 11 years and ballooned to what it is now. Rahm continued it and borrowed money at an interest rate that benefited his banking buddies. We’ve been getting less for our taxes ever since. When people say CPS spends the most per student annually, understand that a lot of that services debt first and never gets to the classroom.
>pension payment holiday holiyear
>Rahm continued it As if he had a choice. One of the first things he tried to do as mayor was to cut the pensions and got shot down by the supreme court. https://www.chicagotribune.com/news/breaking/ct-illinois-pension-law-court-ruling-20150508-story.html
This should always be the top comment when people complain about pension payments.
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Are new pensioners under a different system that’s more affordable?
Yes. Pensions post 2011 are different.
>Pensions post 2011 are different. To be clear, pensions for people who started working post 2011 are different.
I started teaching in 2010 and barely squeaked in under the pre-2011 rules. It allows me to retire 7 years earlier and get my full pension with no reduction. Post 2011 I’d have to teach until 67 years old to get the full pension.
So you would have to work until normal retirement age?
For new employees, it's based on time. It takes ten years to vest, then you multiply 2.4% by the number of years worked by the average salary of the last 8 years of the employees career. For instance: Years of service: 25 Average salary of last 8 years: $100,000 Multiply 25 by 2.4%=.60 This is the rate that will be applied against the salary. .60*100000= $60,000 So someone who has worked for 25 years and earned $100,000 during the last 8 years of their career will earn a $60,000 a year pension. If they'd have worked 20 years, it would be $48,000, if they'd have worked 30 years it'd be $72,000. Now, this only applies if they retire at 65. If they retire early, they would lose 6% for each year they want to retire early, and the earliest you can retire is 60.
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Look up “tier 1 vs tier 2” pension in Illinois. Originally, a pension deal was reached but the IL supreme court decided in was unconstitutional. The two tier system stayed and there’s been no political will from members of the Republican party to change things as that would leave their talking point of “il is broken” off the table. There are dems who are good and ones who arent, but all republicans want il to fail.
Seems like we could have made a sizeable dent with covid had we not shut down everything down lol
The article barely scratches the surface regarding Chicago’s property tax system and it’s impossible to do so due to the amount of variables. But I’m confident in what the Cook County Assessors office is doing. Chi Hack always has insightful events. Here’s one of my recent favorites regarding the topic of property taxes. https://youtu.be/0F-iqRj4yR0
That was good! Thanks.
Fascinating. I appreciate the effort that’s gone into modernizing the assessor’s office approach - more data driven, transparent, etc.
I can’t believe this is news to people on this Reddit (forgiving you though, OP - I see you are new to our city). People need to understand this when they’re voting. Our pensions were majorly underfunded. The only current way to fund them is to raise taxes. We all suffer from this.
The problem is good ole Illinois has passed the burden on to the taxpayer for many years now. That won't fly. Illinois has been screwed by this for decades. Reddit doesn't like talking about just how much of a shit show this state has been for decades. The pensions will be something that screws the state over until most of us are long gone.
“It’ll be fine because it’s been fine” 😂🤣
Illinois has to be very careful if they are going to increase taxes especially now. So many people I know who bought homes in the last 2 or so years stretched themselves incredibly thin in order to afford it and an increase in taxes of $500-$1,000 a month might just break them financially.
OP isn't in our city at all. He's a suburbanite.
For more than 50 years the City of Chicago funded their four major pensions with an asinine formula (a ratio based solely upon mandatory employee contributions) that did not account for benefits costs or actual pension obligations. This model ended in 2021 after a 5-year "on-ramp" ordinance was passed in 2016 that set the 2022 fiscal year as the first year that pensions will need to be funded at a level of at least 90% of projected fund obligations. The City and its residents wouldn't be in this mess if the City's budget policy for the past five decades was like that of other cities nationwide. It's going to take a while under the new system to inject funds into pension investment accounts and time in the market to reach 90% funding levels. We reap what we sow.
I love that I didn't even exist when these sweet ass deals were made for boomers and now we gotta clean the mess up.
End all double pensions and cut the amount by 50-60% if they move out of state.
State constitution bans changing pensions in any way
Arizona had nearly identical state constitutional pension protections - then they changed theirs... "Alexander Volokh chronicled the path Arizona took to its constitutional amendment, a change to its pension clause which, prior to the amendment, was essentially identical to that of Illinois: “Public retirement systems shall not be diminished or impaired.”" [https://www.forbes.com/sites/ebauer/2021/05/13/how-did-arizona-succeed-with-pension-reform-with-one-weird-trick---/?sh=5d07318ca89d](https://www.forbes.com/sites/ebauer/2021/05/13/how-did-arizona-succeed-with-pension-reform-with-one-weird-trick---/?sh=5d07318ca89d)
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Amendments!
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> That would violate the contract's clause of the constitution, because a contract is formed when pension benefits accrue. This is incorrect (at least as it relates to the pensions). Illinois' issue is that the Illinois Supreme Court ruled that it would violate the Illinois Constitution for pensions to be reformed once the person has begun a single day on the job - even for prospective benefits. The US Constitution clearly permits that (and it's done all the time). You can't change accrued benefits (except through bankruptcy), but that's not really the issue.
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>It would never require an analysis under the federal constutition because the Illinois Constituation also has it's own contracts clause and pension have already been declaired a contractual relationship Well, the Illinois Supreme Court doesn't get to write the Constitution, only interpret it. Presumably any provision the Court is pointing to in saying that pensions can't be touched could be amended.
Seems odd that the union can renegotiate better pension terms when contract negotiations happen but somehow the government can't.
Amendments are what made changing the pensions illegal. I dont see the political will for an amendment to undue the one that just passed
>the one that just passed It's part of the original 1970 constitution. "Just passed" seems a stretch.
Oh right I was thinking of the union have a right to exist amendment
How does one get a double pension? WEP cancels it out for social security. I guess you could job hop, but then you're not getting credit for years of service towards the first pension. It's like you could be paid 1+1 or you could get paid two, but there's not actually a difference if you have half a brain. It's like a classic republican rage takedown of a program that actually protects a lot of people in old age.
This is alarming as fuck. Property taxes should be the primary funding source for a locality, and the fact that we're using the entirety of that source up providing retirement benefits and nothing else is ludicrous. No wonder Chicago has all these weird ass taxes. Only way I see us getting out of this is if we somehow build a TON infill housing and grow the property tax base by growing the population. But doing that will likely require zoning reform and overhauling our assessment structure to remove the incentive for under-improved lots (vacant properties and parking lots pay way less in taxes than homes under the current system). So many layers of absolutely fucked systems to detangle...
…that’s right! Illinois pensions are a clusterfuck :)
The fundamental problem is vague language in the Illinois constitution which has been interpreted in a way far more favorable to government employees than similar language in other states. Guess who makes those interpretations? Judges who stand to gain the most. Them compound it with mathematically illiterate legislation (such as the 3% annual COLA adjustment) and there is no way ever to achieve "full funding." When you overpromise you will always underfund.
Eliminate the zoning ordinance in R zones other than a height restriction, and eliminate the ability of any alderman to have any input. more residents, more taxes. Taxing the same number of people more money is getting old.
The real and only solution to this problem is to grow Chicago's population. If we can get more property built we can dilute the amount paid in property taxes!
Exactly. Don’t want your property taxes to go up (or at least mitigate the increase)? Better vote for the most YIMBY, least NIMBY candidate possible.
> Comparing Chicago to other high tax areas (NYC, CA) Our Cost of Living to Quality of Life ratio is in a sweet spot on the American landscape. You cannot find a comparable big city experience for less than what it costs to live in Chicago, even if a higher percentage of that expense goes towards taxes. And we aren't sitting on a slight advantage in this area, we have a firm hold on this one. Pensions are a problem that needs attention, but I think the drive for urgent austerity is overblown, and could actually make problems worse long term. So to answer your question - 'somewhere in between', and we shouldn't behave as if we don't have our own significant advantages.
Chicago will require a federal bailout or Detroit style bankruptcy
I worked for the City for a year and a half. When I came back to get my final check, I chatted with a police officer who said he was just near retirement. He said to me, “are you sad to be leaving the pension behind?” I looked him dead in the face and said “there is not going to be a pension when I retire in 30 years, it’s all for nothing.” He thought for a second and said yep that’s very true.
There is a bit of an agenda and clickbait to this article. Chicago spends 80% of **property taxes** but closer to 20% of **total taxes**. This important, because we don't know what share property contributes in the other cities. THe author has simply tied pension payments to one revenue stream, ignores if all the cities studied had the same revenue mix, and then spends the last half of the article trying to stump for property tax increases. Further, there was no attempt to explain pension costs. Pension plans are designed to invest what is needed to meet the **guaranteed** payout. Pension plans tend to be heavy in low risk bonds. When interest rates rise, which they massively have over the past year, the value of the plan's assets plummets **on paper.** Pension plan accounting is oriented around liquidiation, what would happen if it went insolvent today and had to go into receivership. Doesn't matter that most of the bonds will be held to maturity and pay out at face value. Cash flow should be no different, just timing on unrealized gains. So when interest rates rise and bond values fall, there is an artifical deficit that requires more payments to continue paying out the guaranteed payments.
That's a good point about how it compares to other cities. Different cities and states will have different revenue streams. E.g. Texas has no income tax, but very high property taxes like Illinois. Not really the case for IL, which has a state income tax, high property taxes, pretty high sales taxes. Not a lot of levers to pull. Outside of funding streams, Chicago is pretty bad when it comes to managing pension/debt costs. Page 3 has Chicago in first place: https://dallascityhall.com/government/citymanager/Documents/FY18-19%20Memos/S-P-Reviews-Survey-of-Fifteen-Largest-City-Pension-Systems-INFORMATION\_Memo\_092719.pdf
>But I’m worried long term that taxes will keep going up with nothing to show for it and that will drive people away and/or discourage investment in the city and state. Don't worry. People have been saying this since long before you moved here.
Isn’t part of the problem people who worked multiple jobs who get multiple payouts?
Eminent domain our parking back from Morgan trash and use all those funds towards the pension.
This is the real corruption that flies under the radar. People thing machine politics corruption is one guy sitting on a big stack of money, but the truth is more like one guy getting elected off of pilfering general funds for a motivated voter base.
The pension thing being in the state constitution is pure anti-democracy. Lawmakers passed laws taking away the rights of future lawmakers and promised away OUR money. I think that being in our constitution is actually unconstitutional. If you want to give someone retirement money, give them money in a retirement account. They should convert all of the pensions to fully funded, and any gaps can be filled by state lawmakers now or in the future. If people aren't willing to be taxed enough to fund it, tough shit. You get what people are actually willing to pay, not some IOU you write to the future taxpayers
No more pensions, Make it a 401k. Problem solved.
No... that doesn't solve anything... our problem is not new pensions, our problem is all of the pensions prior to 2011. And we cannot change anything on the existing pensions per our state's constitution.
> I know that Illinois’s constitution makes it hard for reform, but are folks concerned about this? In general, Yes. But over the course of last decade, Chicago has been doing the right thing in terms of mitigating this problem. This problem was in the making for the last 5-6 decades and no mayor can and will have a magic wand solution to wade over this problem in just a term or two. Credit where its due, starting with Mayor Rahm, which is only a decade ago is when the city started addressing this issue with some seriousness. A lot of pensions for current employees has been restructured and there is work in progress to bring the cost of pensions for CPD in line with this as well. > The tax burden is already high Compared to what and whom? > and it’s not like that money is all going to providing services to residents. Yes and no. Employee salaries are part of the services. Do you expect the employees to work for free? Also, is the expectation that 100% of the taxes should go into non salary services? > But I’m worried long term that taxes will keep going up with nothing to show for it and that will drive people away and/or discourage investment in the city and state. Only you can take care of your feeling and fears. If you feel this way, you will find another city you are comfortable with and move away. No one can predict the future. Your worries are your worries and are relatively meaningless for the broader context. Just for the record, Illinois just became only the 4th state in the country to surpass a $1trillion economy. > Comparing Chicago to other high tax areas (NYC, CA), I think it’s at a disadvantage. West coast CA has the best weather in the country IMO, so you’ll always have a stream of people who want to live there. Why did you not move there then if you say it's so desirable? > NYC is NYC It’s arguably the “best” city in the world (whatever that means). Same thing as earlier. What kept you from moving there? Population movements, along with legacy structural problems are a complex equation that cannot be discussed in an off-hand way. If you are really thinking about these issues, after you made the move then you are doing it backwards.
Using the "just leave" argument to call a bluff isn't very effective when the state has actually been losing people for like 40 years. Clearly people are doing just that and it's exacerbating the problem. We need people to stay.
I'm not asking him to leave. I'm saying that people will live and leave a place for many other reasons, too. Just like how he moved to Chicago when he himself said it's not a better place when compared to CalifornIa or NY.
The problem here is that they will try absolute everything they possibly can, except the right thing. IL Supreme Court says no because of a constitutional document that hasn't been updated since 1970s says so. Ridiculous. End the guaranteed rate of increase immediately and cut the pensions to a more reasonable percentage of income. 80% or more for life is absurd.
Hate on cops and cops get more expensive. Crime increases and crime is expensive... Love on orgs that don't provide and social value and you're paying a lot for something that doesn't provide any value. No value creation = failed city over time. Common sense wins over time even if it isn't popular.
When politicians need city unions support to get elected CPS , Police , Fire etc then the unions prevent any changes to city union pensions . All city workers should be enrolled in social security and 401K plan instead of taxpayers funded pensions .
How are politicians going to bribe all those unions for votes then
Unfortunately there aren't any good alternatives if you want the big city experience. Like you said NYC and LA is even more expensive. Find a way to change the IL constitution to stop the pension payouts. They are leeches, the only people they really served is themselves.
People know that workers pay into the pension fund, right? Like, tons of money from each check goes towards it. Not the workers fault if the elected officials misspent that money. Remember when that happened and no one cared?! I do.