Rahm Emanuel, who hopes to run for president, has a plan to pay for the city’s unsustainable pension costs – double everyone’s real estate taxes.
Not having learned anything from Detroit’s collapse, Chicagoans aren’t scaling back pension salaries and benefits, they are going to tax the people until they can be taxed no more.
Wouldn’t Rahm make a great president?
The State of Illinois is currently in second place in the number of citizens moving out of state. Outward migration for The Land of Lincoln ranked second only to New Jersey in 2013. In addition, business activity is on the decline.
Detroit has worked out a deal after their bankruptcy. As usual investors pay 80% and unions pay 20%. This is not a good sign for investment potential and we can expect a lot more of this as city after city goes down.
Democratic unions and their hand-picked politicians have created under and unfunded pension liabilities. The politicians underfund them to balance their budgets and get re-elected.
Illinois has one of the worst pension situations in the country. The liberal states do in general because they all follow the same playbook.
Rahm’s plan to tax workers to pay for unreasonable and underfunded pensions is the only plan Democrats can come up with.
In Illinois, union jobs including firemen, police officers, et al, are “entitled” to 100% of their salary in retirement after working only 15 years. They also get health insurance and other benefits. That is of course absurd. Some pensions are 120% of their salary because they include overtime accrued in the last few years of employment.
Democrats have so mismanaged the pension system, that they will have no choice but to tax until people leave as they left Detroit so that mostly the poor and pensioners remain.
Homes in Illinois, particularly Chicago are losing value overall, which is what went on in Detroit. The higher the taxes, the less the house is worth. It’s not a problem for the government, they will just repossess.
Rahm is warning people Chicago could follow Detroit into bankruptcy but he’s accepting no blame and he’s come up with a flawed plan to deal with it. He wants to take money from workers to pay for people not working. How long will it be before workers desert?
Without taking any responsibility for the problem (it’s only his Democratic predecessor’s fault), Rahm Emanuel warned that Chicago’s current budget deficit of $338.7 million is expected to grow to $1.6 billion by 2016, due largely “to ballooning obligations under current pension legislation.”
Chicago is facing a balloon payment of $1.07 billion on its $19.4 billion pension debt for city employees. The shortfall amounts to $7100 per Chicago resident and that is only for the balloon payment. According to The Wall Street Journal, the balloon payment alone could pay for the salaries of the Chicago Police Department’s entire 4,300 officer force or for the re-paving of all 16,000 blocks of roads in the city. The balloon payment is one-third of the city’s budget and Rahm has no idea how to pay for it.
“The Chicago teachers’ pension fund is roughly 54 per cent funded, far below the 80 per cent threshold considered healthy,” Financial Times reported last December. “But it is better off than the city’s municipal workers, police, labour and firefighters’ pension funds, which Fitch, the credit rating agency, estimates are collectively 33 per cent funded.”
This pension mess doesn’t include teacher pensions which are the worst-funded in the country.
The city and the city employees donate to their pension systems but the government uses and misuses the money much as the federal government does.
If Chicago goes down, Illinois will too.
The country is going bankrupt one city at a time.
CHECK OUT THE TAXES IN CHICAGO:
Property taxes in Illinois average 2.28 percent of a home’s value. Chicago is the seat of Cook County and a little of it extends into DePage County.
Taxes for family earning $25,000: $3,898 (4th highest)
Taxes for family earning $150,000: $14,814 (14th highest)
Unemployment rate: 9.7% (12th highest)
As of 2011, Chicago residents paid the highest effective sales tax rate of any city studied, at 9.75%. This increased the tax burden for lower-income earners, who paid a higher percentage of their income in sales taxes. Partly because of the city’s sales tax, a Chicago family earning $25,000 had a state and local tax burden equal to 15.6% of their income, while for a family earning $150,000, the figure was just 9.9%. Poorer residents are also burdened by the state-level flat income tax, which was raised from 3% to 5% in 2011.
Chicagoans face the fifth highest taxes in America according to a list of U.S. cities with the highest tax burdens by the Wall Street Journal.
Violent gun crimes, among the nation’s highest, also fit into the equation and their harsh gun laws haven’t put a dent in the problem.