Chicago’s Road to Dystopia Is Paved with Public-Pension Promises
Have you ever wondered what it would be like to live in a post-apocalyptic dystopia?
Hollywood loves the subject, with movies ranging from classics like Blade Runner to popular movie series like the Hunger Games to almost-completely forgettable films like those in the Divergent series.
I remember that last trilogy only because it was set in Chicago, which is well on its way to becoming the rundown city depicted in the film, although the series never adequately explains why the people of the future chose to abandon that city. Writing at City Journal, Steven Malanga explains why the Chicagoans of today are increasingly making that choice (emphasis mine).
In early 2012, Chicago mayor Rahm Emanuel warned residents and local politicians that, unless the city, along with the state of Illinois, started tackling its deep pension problems, “You won’t recruit a business, you won’t recruit a family to live here.” Seven years later, as Emanuel exits office, it’s becoming clearer what he meant.
A few months ago, Realtor.com predicted that Chicago would have the weakest housing activity this year among the nation’s top 100 markets. Average housing prices in the Windy City still haven’t completely recovered from the real-estate downturn that began in 2009, though property taxes continue to climb. No wonder, then, that Illinois ranks among states losing the most people to other areas of the country, or that some Chicago-area homeowners are taking big losses when they sell their houses. The future doesn’t look brighter. “Taxes are high, the services [that taxes] pay for are terrible, and the debt load is so high, so palpably unsustainable that people have no belief that the resources can be found to turn it all around,” Ball State economist Michael Hicks told the local press last year.
Government-employee unions have pushed legislation that gradually forces local municipalities to ramp up pension contributions, even as efforts to control retirement-system costs have sputtered. The result: higher taxes. Chicago’s annual pension payments have doubled over the last few years, to nearly $1.2 billion, and are set to rise to $2 billion within three years. In 2015, the city passed $543 million in property-tax increases, phased in over three years, to pay for the burden. Every penny that the city collects in property taxes goes into the pension system. The financially troubled Chicago school system has also been raising its share of local homeowner taxes, including a $224 million hike in the 2017 school year. The combined bite now gives Chicago among the highest residential property-tax rates of any American city.
City officials are increasingly diverting the funds meant to provide for services such as police, schools, trash pickup, and road repairs to prop up the extremely generous pensions of retired local government employees, which according to OpenTheBooks, includes more than 574 former city employees collecting six-figure annual pensions in 2018. That’s a level of income that would rank these retired bureaucrats among the top 10 percent of all income earners in the nation.
For years, voters in some states have acted as if government financial problems, including massive pension debt, weren’t real. Everything would work out somehow, they seemed to believe. Take a look at Illinois and the nation’s third-largest city to see how that bet is playing out.
Who knew that the road to dystopia was paved with the pensions promised by today’s politicians to their government’s employees?