“There’s more than corn in Indiana,” a popular mid-1990s jingle proclaimed.
While the ad was for Indiana Beach theme park, today it could be an anthem for the many frustrated Illinois residents moving to the state next door for a better, more affordable quality of life.
New Federal Housing Finance Agency data shows Illinois home price appreciation is the slowest in the nation — growing at a less than 2% annual rate compared to the nearly 5% national average. Homes are our biggest investment, so what do you do with an investment performing well below the market?
Shedding the poor Illinois investment and buying in Indiana is one answer. But there is a simpler solution than packing up your household — if state leaders will listen to you.
The Land of Lincoln’s poor performance sticks out in the region: five out of six neighboring states experienced home price appreciation at or above the national rate. Falling home values combined with rising income taxes and property taxes raise the total cost of homeownership here.
In the Chicago metropolitan area, the picture is especially bleak. Home values are only appreciating 1.6% annually, ranking a depressing 95th out of the nation’s 100 most-populous metro areas from the third quarter 2018 to the third quarter 2019. Neighboring Gary, Indiana, experienced some of the strongest growth — 7.9% a year and ranking No. 7 in the nation for the 12-month period.
Anyone who’s driven Interstate 90 past Gary knows that city has problems of its own, suffering from decades of economic struggles. Yet Lake County, Indiana, where Gary is located, is one of the top destinations for migrating Cook County residents. Cook County lost nearly 4,300 residents on net to Lake County, Indiana, during tax year 2017-2018, the most recent data available. In total, Illinois lost 4,600 residents to Indiana during that period.
Weak housing market performance should at least mean property taxes won’t increase very much. But that’s not the case: since 2007 property taxes in Cook County have grown by 22% after adjusting for inflation.
Illinois has sacrificed the quality of its schools, public service and its economic stability in order to feed a beast with a bottomless appetite — public pensions.
Even with those sacrifices, it’s estimated Illinois’ five public pension funds are collectively short as much as $250 billion. Chicago’s city pensions are short roughly $30 billion. You pay for that each year in income and property taxes, but you’re also sacrificing growth in the value of your biggest investment.
Chicago can’t tax its way out of this crisis. Neither can the state of Illinois. The only way property taxes can go down — and homeownership can be worth the high monthly costs – is for lawmakers to do that aforementioned listening and get the state’s biggest expense under control.
Sustainable, real pension reforms could solve the problem once and for all — preventing the massive income and property tax hikes that are making Illinois homeowners grimace year after year.
So long as Illinois continues to pursue massive income and property tax hikes instead of necessary structural reforms, Illinoisans will likely continue to find better opportunities elsewhere and the housing market will continue to struggle.
That’s why Illinois needs real, substantive, and innovative reforms through a constitutional amendment. All stakeholders stand to benefit now while modest, commonsense changes can still stave off disaster.
By allowing for changes in future unearned benefits, the state could preserve existing retirement benefits and avoid devastating tax hikes and bankruptcy. In addition, the amendment would allow for changes such as increasing the minimum retirement ages and capping pensionable salaries that lead to multimillion-dollar payouts over time.
There’s more than high taxes in Illinois: world-class sports teams, museums, conservatories, zoos, Michelin-star restaurants and gorgeous beaches of our own. Topping that list are our friends and loved ones.
Those are the things that make Illinois home. You should fight for your home.
Orphe Divounguy is chief economist for the Illinois Policy Institute.
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