Illinois Bankruptcy Bailout/Tax Burden (Chicago, Union: real estate, crime, loans)

[SLKNWJXNQ]

As a resident of Illinois (not a home owner), I have read extensively about the Illinois tax burden and especially the amount of property taxes, owners must pay. As someone who wants to own a home, the amount of property taxes scare me to a point where I have thought about moving to other states to buy a home.

In the next year I believe Illinois and Chicago will declare some form of bankruptcy because of the amount of financial stress the pandemic has put on the state.

What would bankruptcy look like? If the federal government does not bail the state out would we see taxes continue to climb?

If the federal government did give us a bailout taxes would theoretically be lowered? Right?

Also I am a state employee very far from retirement but how would this situation effect pensions and salaries for state employees? I currently work in the schools where most of the teachers make upwards of 70,000 per year. Would Illinois continue to pay state workers well?

[Maintainschaos]

Look towards Michigan as a potential exemplar.

[westender]

Originally Posted by SLKNWJXNQ

If the federal government did give us a bailout taxes would theoretically be lowered

This will not happen in the next fifty years. The country would have to undergo revolutionary change for people in other states (aka the majority of federal taxpayers) to be compelled to bailout the public pensioners of Illinois. Every state has its own problems.

[CCrest182]

Originally Posted by westender

This will not happen in the next fifty years. The country would have to undergo revolutionary change for people in other states (aka the majority of federal taxpayers) to be compelled to bailout the public pensioners of Illinois. Every state has its own problems.

It's not unheard of though. This pandemic has definitely increased talk and speculation of cities/states being bailed out. I'm not sure if it will actually happen, but I wouldn't say it's an impossibility.

[SLKNWJXNQ]

Originally Posted by westender

This will not happen in the next fifty years. The country would have to undergo revolutionary change for people in other states (aka the majority of federal taxpayers) to be compelled to bailout the public pensioners of Illinois. Every state has its own problems.

Democratic politicians have been talking about it. The thinking is because Illinois, NY send billions to the federal government to support states like Kentucky that they should receive a bailout.

[MSchemist80]

Yea and the Trump and the Senate will bailout bleepup blue states over their dead bodies.

[ez1234]

I believe the reason why they are trying to avoid bankruptcy and go for the bailout is because it will kill most state pensions. Defund the politicians.

[NoHyping]

Some forget how in 1975 NYC was in a dire situation. It drastically cut all city services and crime was skyrocketing. It was on the verge of bankruptcy for years land desired a Government bailout or loan package and then President Ford denied NYC any such thing.

Then by 1975 the day was at hand. Bankruptcy Papers were completed and about to be filed. A perfect storm of a new state governor and pressured President Ford gave in to float Government Loans to NYC. It was a long road out and as we know NYC recovered and did pay back the loans.

Detroit also cut everything and the city degraded to abandonment till declaring bankruptcy.

No city should have to go to such a level of chaos and declines before doing bankruptcy or government aid again. Chicago cutting all services and have any progress of what the city had taken away and even crime getting much worst is not a option the Nation should desire.

Many states and cities are in huge pension debts, even mighty fast growing Texas. NYC also tremendous pension debt. Eventually a state will set a precedence for this National issue of many states and major cities. Will Illinois be first? Seems a likely candidate and a National referendum on Pension debt reform of some kind that Illinois has not been able to gain compromise with Unions etc.

Either way as President Trump knows very well. Bankruptcy is a NEW START as he himself used many times. We had Mitch McConnell the Majority Speaker of the Senate even remark a few months ago that cities heavy in debt before this Pandemic should possibly look at bankruptcy, but then he backtracked on that. Still he said it. States cannot default so that alone would be a first and set a new precedence again.

Again, many states are in the same boat to varied degrees. NYC has even more debt per person then Illinois. Illinois so far does not allow a city in the state to do bankruptcy. That is easily changed though or should be if that time is neigh.

Would government Loans as NYC received decades ago be something to turn the city around? That would only be if this Pension debt can be relieved and steps to lessen increasing burdens ended. So again, a National Precedence for cities and states looked into.

I believe after this election that this is what is to be looked into and sought. Perhaps a Loan package with strings to get compromises on the Pensions. Or seek bankruptcy. At some point seems inevitable There seems to be no way out to relieve the debt and therefore no way to improve the burden but for taxes that still hardly even place a dent in it anymore. So the INEVITABLE is DEFAULT. It seems it is only WHEN not IF.

[RisingAurvandil]

I've never worried too much about the pensions. They have been reformed and the savings will become apparent as retirees pass. Food for thought: Even the Illinois pensions are better funded than Social Security, which is essentially a paygo system.

I've lived in a few states, and the only big outlier I've seen in Illinois is higher real estate taxes. Oddly enough, the state of IL gets a bad wrap for taxes, but real estate taxes are entirely a local affair. The state does not levy any real estate tax.

Perhaps it is worse in some areas, but where I own property in the Metro East, I am only paying $2500 in real estate tax on a $100k home. Sure, the percentage rate is high. But buying in another state to save $1000 wouldn't be worth the hassle to me. Especially considering that property taxes are deductible against both federal and state taxes.

[MovingForward59]

Originally Posted by RisingAurvandil

I've never worried too much about the pensions. They have been reformed and the savings will become apparent as retirees pass. Food for thought: Even the Illinois pensions are better funded than Social Security, which is essentially a paygo system.

I've lived in a few states, and the only big outlier I've seen in Illinois is higher real estate taxes. Oddly enough, the state of IL gets a bad wrap for taxes, but real estate taxes are entirely a local affair. The state does not levy any real estate tax.

Perhaps it is worse in some areas, but where I own property in the Metro East, I am only paying $2500 in real estate tax on a $100k home. Sure, the percentage rate is high. But buying in another state to save $1000 wouldn't be worth the hassle to me. Especially considering that property taxes are deductible against both federal and state taxes.

Until you can not physically pay them anymore as they continue to soar.
Check back with us in 5 years and see how much your property taxes have increased.
Oh and don’t forget the SALT deduction is capped at $10,000.