The best way to pay off Illinois’ $130 billion in unfunded pension debt is a statewide 1 percent property tax on top of local property tax levies for the next few decades, according to a report from the Federal Reserve Bank of Chicago.
In the report, Thomas Haasl, Rick Mattoon, and Thom Walstrom said the best way to raise $130 billion in revenue would be to add another line in homeowners’ property tax bills. This would cost the owner of a $250,000 home another $2,500 annually. The report estimates a 1 percent tax on all home values in the state would pay off the debt in 30 years.
The analysts said this would be the “most equitable” way to raise the money because homeowners are more likely to have benefited from state spending.
“It seems reasonable that they should pay a larger share of the costs,” the report said.
Jon Broadbooks, vice president for communications for Illinois Realtors, said homeowners would likely revolt if they were to see property taxes spike like that.
“If you were to suddenly impose an increase of $2,500 a year on an average house, people would be screaming,” he said.
The Fed analysts reported there would be an immediate 20 percent reduction in property values that would eventually rebound, but Broadbooks said that would likely put countless homeowners underwater on their mortgages.
The proposal was initially released at an event in April. Attendees were reportedly taken aback.
The Fed report acknowledged there would be issues with the suggestion and said they would look at ways to make the idea more equitable.
Conservative suburban Chicago Rep. Allen Skillicorn, R-East Dundee, said any plan that hikes taxes on homeowners like this shouldn’t be taken seriously.
“We’re not solving the problem,” he said. “We’re just taxing people more.”
Wheaton Rep. Jeanne Ives filed a resolution last week in “staunch opposition to any new statewide property tax.”
Illinoisans already pay some of America’s highest property taxes.
– From Illinois News Network