Politicians talk about providing homeowners with well-deserved property tax relief. If they’re serious, they have to tackle the local public-sector pension crisis first.
By, Hilary Gowins – Crain’s Chicago Business
August 24, 2018
Dwight Magalis retired in 1997 as Lake County administrator at age 52. He has collected $2.7 million in pension benefits since then. He paid in just $82,000. After leaving government, Magalis started a management consulting business.
Peter Brunk is 59 years old. Like Magalis, Brunk lives in Lake County. But he’s still at least six years away from retirement. And when he does quit working, he says the math just doesn’t add up to stay in Illinois. He’s considering Texas, the Carolinas, Arizona—anywhere he can get a better bang for his buck. He’s even looked at homes in Florida worth nearly double his Lake Villa house but with property taxes costing less than $3,000. Here in Illinois, Brunk’s property tax bill is about $10,000 a year.
“We purchased our home in 2010 for $269,000 and have made tens of thousands of dollars in improvements, but our current assessed valuation is about $10,000 less than what we paid,” Brunk says. “Illinois is making the business case to leave one of the simplest calculations (anyone) can imagine.”
This goes a long way toward explaining why property tax bills are sky-high and home values aren’t keeping pace—in Lake County, residential property taxes grew 160 percent faster than home values from 1996 to 2016.
Countless politicians have talked about wanting to provide homeowners with well-deserved property tax relief. These ideas are necessary and worth pursuing, but there’s a catch: If Illinois wants to provide property tax relief, it has to tackle its local pension crisis.
Opponents of reform will say the core of the issue is that the systems have been chronically underfunded over the years. It’s true. Politicians have skipped payments and artificially lowered payments, only to dump them on future generations. But taxpayers have kept paying more and more over the years to fund enormous growth in pension benefits that they could never afford in the first place—benefits like Magalis’ $169,000 annual pension that grows by 3 percent each year no matter how low inflation is.
To be clear, Magalis has done nothing wrong—he and other public-sector pensioners simply have taken advantage of a deeply flawed, unsustainable system. Nearly 100 municipal retirees in Lake County alone have collected $1 million or more from Illinois’ pension system. But taxpayers like Brunk are tapped out and are fed up with paying more and getting less. And while many government workers can retire in their 50s and become millionaires off the pension system, private-sector workers are having to tighten their family budgets to pay for rising property taxes.
If politicians are serious about giving homeowners property tax relief, they must stop putting off the state’s biggest policy challenge and get down to fixing Illinois’ pension crisis.