Where is all the Money Going?

Property taxes keep going up, but services aren’t improving. Paying more and getting less is a trend that residents want to see reversed.

Real estate agent Andrew Carlin knows Illinois’ property tax math all too well. He not only makes his living helping people buy and sell homes, he’s also a homeowner.

He purchased his 1,000-square-foot home in Lake County in 2016. Back then, the annual property taxes were about $2,500. The next year his bill jumped to $4,500. By 2021, Carlin’s property taxes hit $7,000.

“In Lake County, the property tax amount is a major driving factor in affordability and a buyer’s decision on purchasing a home,” Carlin said.

“We love where we live, not because of the municipal services, but because we grew up here and our families are here. We’re on the edge of selling and moving to a different community or a different township or a different county that has less government bodies that are funded by property taxes. That means going over the border right now to Wisconsin or potentially going to McHenry County in an unincorporated area.”

So where is property tax money going?

The reality is that tax dollars are getting diverted away from the things people value – like schools and public safety – and being spent on public pensions instead. Total residential property taxes in Lake County have increased 122% from 1999-2019 (51% when adjusted for inflation).

Only 19 percent of municipal property tax dollars raised for fire departments is spent on protecting the community from fires. Residents saw funding to fire departments cut by $1.3 million while funding for fire pensions increased by $13.8 million from 1999 to 2019.

The pension crowd-out problem is the same for police departments. From 1999 to 2019, Lake County property taxpayers spent an additional $32.2 million on police, but pensions consumed a vast majority of these funds. About 84 cents of every additional property tax dollar for municipal police departments in Lake County – more than $27 million – went to pensions rather than police protective services.

People like Carlin love Illinois. It’s home. So it’s disheartening to see people fleeing, either because they’re forced out because their home is becoming unaffordable or they’re losing confidence that Illinois is a place where they can prosper long term.

“I’m used to a business where I’m helping clients sell their starter home or their forever home, and buy their move-up home or downsize home,” Carlin said. “The last nine months have been the most odd as far as the amount of people selling their home and not buying, which means they’re selling and leaving for other states.”

This is a huge problem for Illinois and one that politicians must fight to reverse. And the change has to come from Springfield.

Pension reform is the only way to make sure property taxes don’t spike again year after year as the cost of public retirements continues to grow out of control.

The Illinois Policy Institute has proposed a constitutional amendment that would protect what workers and pensioners have already earned while controlling the growth in future benefits. That amendment was filed in the General Assembly in 2020 as House Joint Resolution Constitutional Amendment 38, but was not voted on or even debated in a committee hearing, in part because the legislative session was cut short by COVID-19.

Recent polling from the Paul Simon Public Policy Institute found 51% of Illinoisans support “an amendment to the Illinois Constitution that would preserve state retirement benefits already earned by public employees but would also allow a reduction in the benefits earned in the future, whether by current or future employees.”

Lawmakers have the will of the people when it comes to getting pensions under control. Now it’s time they find the will to do what’s right and tackle pension reform.