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New survey finds 37 percent of small businesses delinquent on October rent

By PATRICK ANDRIESEN
Illinois Policy Institute

A survey found 37 percent of U.S. small businesses were delinquent on October rent, with inflation and rising costs absorbing “most sales gains.” Amendment 1 would likely raise commercial property taxes, and therefore rents in Illinois.

A new survey found 37 percent of America’s small business owners were unable to pay rent on time or in full during October, citing inflation, rising rent, labor and gas costs for the growing delinquency.

Alignable’s monthly business report said 59 percent of entrepreneurs reported less consumer spending in October than the month before. During September, business owners reported a 30 percent delinquency rate.

On Nov. 8 voters in Illinois might make it even harder for businesses to make rent if Amendment 1 at the top of the ballot is passed. It is expected to lock in a $1.8 billion commercial property tax during the next four years. Those tax hikes are factored into rent by landlords.

Illinois businesses already face challenges from a looming unemployment tax hike, the nation’s third-highest number of regulations and the potential for a recession. The Tax Foundation’s state business tax climate ranking recently showed Illinois dropped 7 places in five years as neighboring states rose or held steady. Amendment 1 could make a bad business climate worse.

Amendment 1 would expand government union negotiations far beyond traditional wage, safety and benefit issues to include topics without legal precedent such as “economic welfare” and “safety at work.” If passed, this language would empower government union bosses to negotiate over a nearly endless array of subjects – from removing strike limits to defunding the police.

Proponents have wrongly said the proposal would cover private-sector unions, but federal law covers them so this state proposal could only cover less than 7 percent of the Illinois workforce with government jobs. That group already enjoys the nation’s most extreme labor protections.

Commercial properties are not the only ones facing property tax increases. Homeowners also face hikes. All told, Illinois is expected to see an extra $4 billion in property taxes by 2026, with homeowners paying half of that.

If property tax rates simply continue to increase at their long-run average rate, the typical homeowner will pay over $2,100 in additional property taxes during the next four years. Illinoisans already are paying the nation’s second-highest property taxes, which are double the nation’s average.

Amendment 1 could greatly accelerate that growth by giving government unions the power to negotiate costly contract concessions that carry more weight than state law.

Proponents of Amendment 1 argue the Nov. 8 ballot language doesn’t explicitly say voters will be paying higher taxes if these unprecedented powers and protections are granted to government unions.

Taxpayers also weren’t told the costs in 1970 when government pension protections were put in the Illinois Constitution. But Illinoisans are now burdened by $313 billion in unfunded state pension debt.

The costs are too often an afterthought in the Statehouse.

 

Patrick Andriesen is a writer with the Illinois Policy Institute. Prior to joining the Illinois Policy Institute, Patrick graduated from Indiana University’s Kelley School of Business with dual bachelor’s degrees in Business Analytics and Marketing.

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