Amendment 1 would lock sky-high property taxes into Illinois Constitution

Amendment 1 would lock sky-high property taxes into Illinois Constitution

A change to the Illinois Constitution on the 2022 ballot would effectively transfer power over tax dollars from the people and their elected representatives to special interests. It would thwart any efforts to curb the nation’s second-highest property taxes.

Illinois’ property taxes are already the second-highest in the nation and a major reason taxpayers are fleeing to lower-tax states, but the problems could be made worse on Nov. 8.

That is when voters will be asked to decide on a constitutional amendment that could cause property taxes to rise even faster. The change would also prevent many of the significant reforms that could lessen homeowners’ tax burdens.

Amendment 1 would grant unprecedented powers to government unions – already Illinois’ most powerful special interest group – including the power to override voters and state lawmakers. Proponents are selling it as a constitutional ban on passing right-to-work laws – laws that protect employees’ rights to keep their jobs without having to pay fees to a union. Illinois is not one of the 28 states that currently have right-to-work laws, so that aspect has little meaning.

The amendment does include three other provisions which together would severely weaken taxpayers’ voices in state government and make it easier for government union bosses to make unaffordable demands in collective bargaining contracts. Even without these provisions, powerful government unions helped public sector wages grow 60% faster than the private sector in Illinois from 1998 to 2019.

Peer-reviewed research shows stronger public sector unions cause the cost of government to increase, with powerful unions putting even more upward pressure on benefits than on wages. Public retirement benefits, which flow mostly to union workers, have left Illinois’ local governments with $75 billion in pension debt and are already the primary cause of rising property taxes. Government unions helped Illinois politicians build the state and local pension crisis by supporting both unaffordable benefits as well as irresponsible funding games that pushed costs into the future.

Nationwide data from 2010 to 2019 shows a significant statistical association between the percentage of government workers who are union members and each state’s average effective property tax rate.

The correlation coefficient is 0.53 with outliers Hawaii and Alaska excluded, and still relatively strong at 0.45 with states outside the mainland included.

When union power increases, homeowners’ tax bills tend to go up as well. Daniel DiSalvo, a political scientist at the City College of New York and senior fellow at the Manhattan Institute for Policy Research, details this trend in his 2010 essay for National Affairs, “The Trouble with Public Sector Unions.”

Experts mostly agree on three major effects of powerful government unions, according to DiSalvo. First, public unions drive up government spending by pushing wages and benefits higher. Second, public unions tend to increase the number of government employees as they seek to grow their own membership. Finally, powerful unions reduce the efficiency and quality of government services.

Two factors contribute to the decrease in government services' efficiency and quality associated with union power, as detailed in “The Warping of Government Work.” First, strong unions make it more expensive to hire each employee, resulting in either fewer employees or less efficient spending. Second, even though unionized governments pay low-skill employees more than the private sector and have higher wages on average, the relatively flat union wage scales pay high-skill employees less than the private sector. This makes it hard to attract good talent for top jobs. At the same time, unions often push for policies that make it difficult to dismiss or discipline problem employees, creating an incentive for low-skill employees who struggle to find private employment to seek government jobs.

In Illinois, this impact can be clearly seen by looking at public budgets from 2000 to 2021. During that period, inflation-adjusted spending on public pensions exploded 533%, and spending on government worker health insurance grew 126%. Meanwhile, spending on education rose just 21% and spending on all other core government services fell by 14%. Today, pensions consume more than 25% of the state budget.

The bottom line is government unions in Illinois have used their power to make taxpayers pay more to get less. The average taxpayer in Illinois faces the nation’s highest state and local tax burden. And yet, taxpayers also face the second-biggest debt burden among states relative to the size of each state’s economy. That means taxes will only continue to go up without significant financial reforms.

Amendment 1 would prevent many of the changes that would do the most to lower Illinois property taxes.

For example, legislation known as Act 10 passed in Wisconsin in 2011 and made a variety of changes to laws about government unions’ power. It limited the subjects of bargaining to wages, with increases capped at inflation without voter approval, for all government unions other than police and fire. It also required government workers to start paying a substantial share of their own pension and health care benefits, among other changes.

Act 10 has saved Wisconsin taxpayers nearly $14 billion since taking effect, including $1.3 billion in school districts and $2.4 billion in other local governments. Some evidence suggests increased flexibility in educator pay scales attracted more talented teachers and improved student achievement.

However, Amendment 1 would make union organization and bargaining in Illinois a “fundamental right” over virtually limitless subjects. It also bans lawmakers from passing any law that “interferes with, negates, or diminishes” this right. That means lawmakers in Illinois would never be able to address the fact that state workers pay less than half the share of what private sector workers pay for their own health care, with similar problems at the local level.

It could also complicate efforts to fix Illinois’ pension crisis, which itself requires a constitutional amendment to undo special privileges granted to government pensions in the 1970 Illinois Constitution. Today, members of state pension systems typically receive more than $2 million in retirement benefits and cover just 5% of the cost through employee contributions.

Reforms that preserve retirement benefits earned to date but adjust them to reasonable and affordable levels going forward could fix the pension system and protect taxpayers, but not if unions are able to insert these benefits into collective bargaining agreements. State law already says union contracts trump state law when there’s a conflict, so Amendment 1 potentially provides an avenue to making the pension crisis unfixable.

Government unions are already such a powerful force in Illinois politics that it might be hard to see how their influence over taxpayers’ wallets could increase further. But it can get worse.

In recent years the Chicago Teachers Union has refused to teach students unless the union’s  demands were met, including demands over matters of policy that are supposed to be decided by voters’ elected representatives. Amendment 1 would make it easier for unions to take control of these decisions, bypassing legislative bodies, as well as emboldening their existing push for unaffordable wages and benefits.

For Illinois homeowners who have any hope of property tax relief, Amendment 1 would be a killer.

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