No wonder the media tries to hide reality from the taxpayers. It’s too hard to take. It’s better to ignore it.
But in Cook County, Illinois, the reality can’t be ignored any more. The taxpayers are waking up to tax bills showing increases they weren’t expecting, and are flooding the treasurer’s office with complaints. Why anyone would want to be Cook County Treasurer is beyond me, but here she is: Maria Pappas. In at interview with Larry Bell, she said:
The picture isn’t pretty. Almost everyone’s focus is primarily upon finances of the federal or state governments. Few pay attention to local governments.
In May, 2012, the collective debt reported by the local primary taxing agencies in Cook County was more than $140 billion! To put that in context, the total debt-per-household in the City of Chicago was $87,720, and $35,774 in the suburbs. Since local governments cannot print money, they rely on property taxes as their main revenue source to operate.
Homeowners might be able to give their homes to their children, but that future generation won’t be able to afford to keep them because of the property taxes, which have doubled over a 10-year period. (my emphasis)
Bell asked her: “Why wasn’t all of this bad news known…?”
Nobody knew the numbers because local governments don’t like to show how badly they are doing! I got tired of people stopping, calling and writing me with one simple question: “Why are my taxes going up?”
So she put up all the data onto a special webpage attached to the treasurer’s website. It allows anyone to see just what is really going on, including revenues, expenditures and shortfalls. Especially the shortfalls. And they can see, if they care to look, that an awful lot of the problem has to do with pension obligations. Surprise, surprise. Said Pappas:
In the City of Evanston, the population is 74,486. Evanston reported total debts of more than $331 million. Evanston’s pension obligations are another $388 million and its pension fund ratio is 47 percent.
The City of Berwyn reported $143 million in debt for a population of 56,657. Its pension liability is almost $160 million. The pension fund ratio is only 40 percent.
The Gail Borden Library in suburban Elgin reported $23.7 million in debt and another $11 million in pension liability.
Bell then asked what the biggest problem was. You can guess:
High salaries given to local government workers greatly contribute to the strain on pension funds when employees retire from service. According to the data supplied by taxing districts, the most common average salary increase is 4.0 percent.
In Cook County, salaries have increased by as much as 90 percent since 1998 due to cost-of-living adjustments and longevity bonuses. For example, if your salary was $24,215 in 1998, you’d make $45,914 in 2013. Governments must look at personnel costs, given that 70 to 80 percent of all government expenses are personnel-related.
This is setting up the classic confrontation: “the irresistible force [pension obligations] meets the immovable object [taxpayers].” I wonder who’s going to win that one?