Well, it happened again. Homeowners in Chicago now face yet another property tax increase to pay for the city’s mounting pension debt. Local taxpayers have already been slammed with nearly $1.1 billion in property tax increases, primarily for police, fire and teacher pensions. That’s on top of a 29 percent tax on water and sewer bills to save the Municipal Employees pension fund; a 56 percent telephone tax hike in 2014 and another 28.2 percent next year for the Laborers fund. Other “revenue enhancements” include a new garbage collection fee, a bag tax, and increases in water, sewer and city sticker fees, hotel and parking taxes and parking fines.
In December 2017, the Chicago Sun-Times reported that another shoe is about to drop — a property tax hike scheduled in 2020 to pay for police and fire pensions. Many Windy City residents have had it. According to the U.S. Census Bureau, the greater Chicago area leads the nation in population loss and has had two such years in a row. This is what happens when taxes become so burdensome — people vote with their feet. Not surprisingly, the number-one destination for residents of Illinois fleeing their high-tax state (the fiscal woes are not limited to Chicago) has been Texas — a state with low taxes and greater economic opportunity.
Without a radical shift in policy away from high taxation and toward economic freedom, Chicago is bound for the same fate as Detroit, a city which reached its population peak in the 1950 census at over 1.8 million people, and decreased in population with each subsequent census. As of the 2010 census, the city has just over 700,000 residents, reflecting a loss of a staggering 61 percent of the population.
We’ve written about Chicago before and hope that what is happening there will serve as a clarion call to California policy makers. But given the fact that California now has the highest income tax rate, state sales tax rate and the highest gas tax in America, we’re less than sanguine.
Nonetheless, California has something Chicago and Illinois do not have — Proposition 13. For us, notwithstanding equally daunting pension problems, we have an effective check against exploding property taxes. Although government mismanagement is also common to California — a number of cities have been forced to file for bankruptcy in recent years, largely due to skyrocketing government employee pension debt — officials are prohibited by Proposition 13 from soaking property owners to cover up their dereliction.
Proposition 13 also provides protection to taxpayers generally by requiring voter or property owner approval for new or higher taxes. Without Proposition 13, Californians could soon experience what it is like to live in Chicago without ever having to leave their homes.
It may be too late for Chicago as it seems destined to suffer the same fate as Detroit. But it’s not too late for California. We are a great state with virtually unlimited potential, a vibrant populace and bountiful natural resources. Moreover, the pension crisis that grips California would be manageable with the right policies.
When the Titanic was headed for the iceberg, a one-percent course change 10 miles away would have prevented the disaster. Will California make a course correction now before its too late?
Jon Coupal is President of the Howard Jarvis Taxpayers Association – California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights. For more information, visit www.hjta.org.