Opinion pieces in out-of-town journals tend to capture my attention and this one in City Journal by Thomas Savidge is no exception. I’m inclined to agree with him that despite its fiscal problems the federal government should not bail Chicago out:
Six years ago, Illinois Senate President Don Harmon sent a letter to the Illinois Congressional Delegation detailing a federal bailout request. Most requests in this letter pertained to budgetary issues that long predated Covid-19, including a $15 billion “no-strings-attached block grant.”
While the feds rejected that specific item, Illinois and Chicago received billions of federal dollars through various stimulus programs. Illinois also received a first-of-its-kind loan from the Federal Reserve. Many proponents of the Covid-19 fiscal expansion still defend this massive spending, with former Treasury Secretary Janet Yellen stating last year that the stimulus was necessary.
The door is open, then, for Illinois and Chicago to return to D.C. and ask for federal assistance. If granted, taxpayers nationwide will pay for the Windy City’s fiscal recklessness. And the bailouts likely won’t stop there. Officials in other cities, such as Mayor Zohran Mamdani in New York, will be watching closely. If Chicago can get a bailout, why not the Big Apple?
Rather than properly manage their budgets, city and state officials may scramble to secure the next spot in line at the federal trough. Fiscal responsibility will erode as state and local officials pay more heed to federal policymakers and the terms of federal funding than their obligations to their constituents.
The only constructive way forward is for federal officials to make an explicit warning against bailouts. When fiscally mismanaged states and cities see that Washington won’t enable their behavior, they may finally make the necessary and painful adjustments to restore fiscal solvency.
The federal government should not bail Chicago out even less than it should bail New York City out. I do think that the State of Illinois for a couple of important reasons.
First, the state has been leeching off Chicago for most of the last century. The preponderance of state revenues are derived from Chicago and that has been true for a very long time. Turnabout is fair play. The downstate belief that Chicago is the leech is poorly founded as the table at the bottom of this post documents.
Second, a considerable portion of the city’s budget is devoted to public employee pensions, making up for decades of fiscal profligacy. The state is compelling Chicago to make up for profligacy of which it is itself guilty.
And neither the city nor the state can tax its way out of the consequences of having kicked the can down the road too long. Tax increases would only hasten the flight of those with the income and wealth on which their revenues depend. No, the only remedy is allowing the city and state to restructure public employee pensions, something presently barred by the state’s constitution.
Estimated 2022 tax revenue by county — includes property tax, state income tax distributions (LGDF), and sales tax. Figures are model-based estimates in thousands of dollars ($K), derived from U.S. Census ACS county data, Illinois LGDF population-share allocations, and county-level effective tax rates. Sorted by total revenue, descending. Not official government data.
| # | County | Property Tax ($K) | Income Tax ($K) | Sales Tax ($K) | Total ($K) | Per Capita ($) |
|---|---|---|---|---|---|---|
| 1 | Cook | $13,285,920 | $920,720 | $6,214,428 | $20,421,068 | $3,966 |
| 2 | DuPage | $2,966,172 | $166,231 | $1,285,440 | $4,417,843 | $4,750 |
| 3 | Lake | $1,947,192 | $127,700 | $922,320 | $2,997,212 | $4,198 |
| 4 | Will | $1,460,820 | $125,332 | $822,195 | $2,408,347 | $3,435 |
| 5 | Kane | $998,400 | $92,441 | $641,498 | $1,732,339 | $3,352 |
| 6 | McHenry | $767,565 | $54,707 | $441,000 | $1,263,272 | $4,131 |
| 7 | Winnebago | $432,576 | $51,670 | $302,280 | $786,526 | $2,720 |
| 8 | St. Clair | $355,356 | $46,847 | $262,143 | $664,346 | $2,535 |
| 9 | Madison | $345,866 | $47,924 | $318,780 | $712,570 | $2,659 |
| 10 | Champaign | $374,019 | $37,553 | $170,100 | $581,672 | $2,770 |
| 11 | Sangamon | $269,685 | $35,050 | $201,474 | $506,209 | $2,583 |
| 12 | Peoria | $292,830 | $32,365 | $157,599 | $482,794 | $2,667 |
| 13 | McLean | $305,618 | $30,762 | $181,656 | $518,036 | $3,012 |
| 14 | Kendall | $298,980 | $23,247 | $184,470 | $506,697 | $3,898 |
| 15 | Rock Island | $203,125 | $25,578 | $109,824 | $338,527 | $2,367 |
| 16 | Tazewell | $197,603 | $23,786 | $122,382 | $343,771 | $2,584 |
| 17 | DeKalb | $207,837 | $18,420 | $73,800 | $300,057 | $2,913 |
| 18 | Kankakee | $149,908 | $19,498 | $95,909 | $265,315 | $2,434 |
| 19 | Macon | $121,296 | $18,779 | $85,050 | $225,125 | $2,144 |
| 20 | LaSalle | $138,474 | $19,498 | $81,169 | $239,141 | $2,194 |
| 21 | Grundy | $98,700 | $9,480 | $70,598 | $178,778 | $3,373 |
| 22 | Vermilion | $77,760 | $13,594 | $56,628 | $147,982 | $1,947 |
| 23 | Whiteside | $71,500 | $10,018 | $39,270 | $120,788 | $2,157 |
| 24 | Williamson | $60,750 | $12,157 | $56,588 | $129,495 | $1,904 |
| 25 | Adams | $64,800 | $11,799 | $61,523 | $138,122 | $2,093 |
| 26 | Ogle | $101,574 | $9,300 | $50,778 | $161,652 | $3,109 |
| 27 | Boone | $94,300 | $9,480 | $55,509 | $159,289 | $3,006 |
| 28 | Woodford | $111,150 | $6,977 | $50,505 | $168,632 | $4,324 |
| 29 | Stephenson | $55,440 | $7,872 | $39,600 | $102,912 | $2,339 |
| 30 | Knox | $52,900 | $8,947 | $33,818 | $95,665 | $1,913 |
| 31 | Henry | $63,800 | $8,767 | $48,510 | $121,077 | $2,471 |
| 32 | Tazewell | $197,603 | $23,786 | $122,382 | $343,771 | $2,584 |
| 33 | Sangamon | $269,685 | $35,050 | $201,474 | $506,209 | $2,583 |
| 34 | Jackson | $42,320 | $10,018 | $36,288 | $88,626 | $1,582 |
| 35 | Effingham | $43,200 | $6,080 | $56,916 | $106,196 | $3,124 |
| 36 | McLean | $305,618 | $30,762 | $181,656 | $518,036 | $3,012 |
| 37 | Monroe | $50,830 | $6,080 | $56,363 | $113,273 | $3,332 |
| 38 | Iroquois | $32,760 | $5,008 | $25,998 | $63,766 | $2,277 |
| 39 | Bureau | $39,520 | $5,904 | $29,833 | $75,257 | $2,280 |
| 40 | Livingston | $39,900 | $6,439 | $32,670 | $79,009 | $2,195 |
| 41 | Lee | $47,040 | $6,080 | $30,294 | $83,414 | $2,453 |
| 42 | Logan | $32,110 | $5,188 | $26,506 | $63,804 | $2,200 |
| 43 | Macoupin | $43,470 | $7,872 | $34,650 | $85,992 | $1,954 |
| 44 | De Witt | $19,285 | $2,862 | $20,088 | $42,235 | $2,640 |
| 45 | Douglas | $21,280 | $3,577 | $29,700 | $54,557 | $2,728 |
| 46 | Fulton | $35,530 | $6,259 | $29,400 | $71,189 | $2,034 |
| 47 | Carroll | $16,965 | $2,503 | $13,485 | $32,953 | $2,354 |
| 48 | McDonough | $29,260 | $5,367 | $22,500 | $57,127 | $1,904 |
| 49 | Randolph | $30,600 | $5,725 | $26,775 | $63,100 | $1,972 |
| 50 | Franklin | $25,650 | $6,977 | $26,784 | $59,411 | $1,523 |
| 51 | Morgan | $37,440 | $6,080 | $29,952 | $73,472 | $2,161 |
| 52 | Christian | $29,700 | $5,904 | $26,303 | $61,907 | $1,876 |
| 53 | Jefferson | $28,560 | $6,798 | $29,925 | $65,283 | $1,718 |
| 54 | Shelby | $20,400 | $3,936 | $19,635 | $43,971 | $1,999 |
| 55 | Clinton | $27,075 | $6,618 | $30,858 | $64,551 | $1,745 |
| 56 | Piatt | $23,275 | $2,862 | $22,308 | $48,445 | $3,028 |
| 57 | Jo Daviess | $30,855 | $3,936 | $24,057 | $58,848 | $2,675 |
| 58 | Ford | $15,600 | $2,324 | $15,444 | $33,368 | $2,567 |
| 59 | Marion | $30,600 | $6,798 | $25,704 | $63,102 | $1,661 |
| 60 | Bond | $16,320 | $3,040 | $15,300 | $34,660 | $2,039 |
| 61 | Jersey | $23,715 | $3,936 | $21,780 | $49,431 | $2,247 |
| 62 | Edgar | $16,560 | $3,220 | $15,138 | $34,918 | $1,940 |
| 63 | Fayette | $16,000 | $3,936 | $16,302 | $36,238 | $1,647 |
| 64 | Whiteside | $71,500 | $10,018 | $39,270 | $120,788 | $2,157 |
| 65 | Hancock | $15,120 | $3,220 | $15,120 | $33,460 | $1,859 |
| 66 | Saline | $16,200 | $4,294 | $13,392 | $33,886 | $1,412 |
| 67 | Mercer | $16,380 | $2,682 | $13,950 | $33,012 | $2,201 |
| 68 | Clark | $14,080 | $2,862 | $13,440 | $30,382 | $1,899 |
| 69 | Cass | $11,220 | $2,324 | $10,920 | $24,464 | $1,882 |
| 70 | Montgomery | $23,205 | $5,188 | $23,142 | $51,535 | $1,777 |
| 71 | Moultrie | $14,040 | $2,503 | $9,828 | $26,371 | $1,884 |
| 72 | Crawford | $13,680 | $3,399 | $11,948 | $29,027 | $1,527 |
| 73 | Wabash | $10,080 | $2,145 | $9,979 | $22,204 | $1,850 |
| 74 | Cumberland | $10,200 | $1,967 | $9,555 | $21,722 | $1,975 |
| 75 | Mason | $13,230 | $2,503 | $10,692 | $26,425 | $1,887 |
| 76 | Perry | $14,250 | $3,757 | $12,358 | $30,365 | $1,446 |
| 77 | Clay | $10,920 | $2,324 | $9,963 | $23,207 | $1,785 |
| 78 | Menard | $14,875 | $2,145 | $13,920 | $30,940 | $2,578 |
| 79 | Union | $12,880 | $3,040 | $10,608 | $26,528 | $1,561 |
| 80 | Jasper | $10,200 | $1,788 | $9,000 | $20,988 | $2,099 |
| 81 | De Witt | $19,285 | $2,862 | $20,088 | $42,235 | $2,640 |
| 82 | Richland | $11,760 | $2,862 | $12,096 | $26,718 | $1,670 |
| 83 | Massac | $9,800 | $2,682 | $8,869 | $21,351 | $1,423 |
| 84 | Washington | $11,730 | $2,503 | $12,600 | $26,833 | $1,917 |
| 85 | Pike | $12,160 | $2,862 | $9,750 | $24,772 | $1,548 |
| 86 | Wayne | $12,000 | $2,862 | $9,720 | $24,582 | $1,536 |
| 87 | Johnson | $9,240 | $2,145 | $8,424 | $19,809 | $1,651 |
| 88 | Scott | $5,520 | $894 | $5,175 | $11,589 | $2,318 |
| 89 | Lawrence | $10,080 | $2,862 | $8,928 | $21,870 | $1,367 |
| 90 | White | $9,975 | $2,503 | $8,591 | $21,069 | $1,505 |
| 91 | Brown | $4,500 | $1,163 | $4,875 | $10,538 | $1,621 |
| 92 | Putnam | $9,000 | $1,037 | $7,519 | $17,556 | $3,027 |
| 93 | Schuyler | $6,080 | $1,251 | $5,355 | $12,686 | $1,812 |
| 94 | Henderson | $7,820 | $1,251 | $5,880 | $14,951 | $2,136 |
| 95 | Greene | $9,600 | $2,324 | $10,140 | $22,064 | $1,697 |
| 96 | Edwards | $5,250 | $1,251 | $5,670 | $12,171 | $1,739 |
| 97 | Hamilton | $5,040 | $1,430 | $5,760 | $12,230 | $1,529 |
| 98 | Stark | $7,560 | $983 | $4,814 | $13,357 | $2,428 |
| 99 | Gallatin | $3,360 | $894 | $3,630 | $7,884 | $1,577 |
| 100 | Calhoun | $5,625 | $823 | $4,002 | $10,450 | $2,272 |
| 101 | Pope | $3,250 | $715 | $3,312 | $7,277 | $1,819 |
| 102 | Hardin | $2,288 | $644 | $1,825 | $4,757 | $1,321 |
| 103 | Alexander | $2,940 | $1,073 | $2,592 | $6,605 | $1,101 |
| 104 | Pulaski | $2,925 | $983 | $2,310 | $6,218 | $1,131 |
| Illinois statewide total (estimated) | $27,138,000 | $2,250,000 | $12,840,000 | $42,228,000 | $3,355 avg | |
Sources & methodology: Property tax estimated from 2022 ACS median home values × housing units × county effective rate (SmartAsset/IDOR data, ranging 1.2%–2.5%). Income tax = LGDF population-proportional share of ~$2.25B in statewide county distributions (Illinois Dept. of Revenue). Sales tax estimated from county population × per-capita income × 30% taxable consumption × combined county sales tax rate. All figures are estimates and should not be cited as official government statistics.
I am surprised Illinois hasn’t imposed an onerous exit tax as California is proposing or have extremely aggressive audits against ex-residents that California has.
I presume Illinois’s state government will attempt those. Neither will solve Illinois’s problems which include endemic political corruption, dominant public employee unions, and years of short-term thinking.
…If you take a walk I’ll tax your feet…
I think Hardin Cty should be control of the state budget. They clearly know how to stretch a dollar.
Do you know of a source showing expenditures as well as revenues?
And how much of their expenditure money comes from the state.
Steve
budget.illinois.gov if you poke around under resources, has a handy interactive buget breakdown that goes from 2019 to present. Breakdown of where in comes in and where it goes.
As I’ve said before, until there is major crisis, e.g. bond markets turn sour, things will teeter along.
I don’t see how the state is leeching off Chicago per that data.
The highest tax revenue is from property taxes, and Illinois is a high property tax state. Property taxes are collected at the local level and distributed locally. AFAIK the state gets nothing.
The second highest category is sales tax. Illinois collects 6.25% on sales (which doesn’t tax services like neighboring low tax states), of which 1.25% is returned to the municipality or county where the sale occurred. However, local governments (at least those with home rule authority) can assess additional sales taxes (currently some are at 11%, Chicago is at 10.25%) all of which is returned to the local community. So, the state gets just less than half of the Chicago sales tax revenue.
Illinois is a low income tax state at least relative to states that tax income and only 4.5% of the money Dave claims that the state is leaching off of Chicago is income tax. The state collects 100% of this, but Chicagoans presumably benefit from state services like Medicaid, and the state has a needs formula that redistributes money to local schools. Chicago public schools attributes 29% of its most recent operating budget paid through this formula. Downstate schools benefit from the formula, but most Chicagoans want a higher income tax, but don’t have legal authority to enact one.
The Illinois Teachers Retirement System is funded from State of Illinois general revenues. Chicago teachers’ pensions are not paid by the TRS. Since money is fungible Chicago is paying the pensions of non-Chicago teachers via state taxes paid by Chicagoans. That isn’t the sole example of that but it’s the most glaring.
The Paul Simon Public Policy Institute of Southern Illinois University found that Chicago receives $.90 back in spending for each dollar in state income and sales tax revenue that Chicagoans pay. That compares with $1.87 in Central Illinois counties.
Traveling so not much time but multiple sources including Chat GPT note that for the counties in Southern Illinois, like Hardin, they receive well over $2.00 back for every dollar they pay to the state in taxes. There would be major issues if Chicago successfully emulated Hardin.
Steve
That Paul Simon study also found the Chicago collar counties only receive 53 cents per dollar generated. I think the suburbanites (including in Cook County) can claim that their taxes are disproportionally funding the state.
From this linked research (from 15 years ago), the Cook county suburbs generate more tax revenue than Chicago with fewer residents:
Chicago (21.01% of state population) accounts for 19.38% of state income taxes; 13.78% of state sales tax and 15.75% of property taxes.
Suburban Cook County (19.48% of state population) accounts for 23.11% of state income taxes; 22.0% of state sales taxes; and 29.70% of property taxes.
Collar Counties (24.33% of state population) accounts for 31.8% of state income taxes; 28.06% of state sales taxes; and 31.30% of property taxes.
Downstate (35.18% of state population) accounts for 25.71% of state income taxes; 36.07% of state sales taxes; and 23.25% of property taxes.
https://www.illinoistax.org/wp-content/uploads/2018/05/21_MayJune2011TaxFacts.pdf
The study finds that tax proceeds correlate with income, except downstate proportionately pays more sales tax presumably because of gasoline, and Chicago pays proportionately less because of less motor vehicle usage and a lot of retail has situated just outside city limits.
The issue isn’t just who pays the taxes but who benefits. The further south you go the more the counties receive money in higher ratios than they contributed.
Steve