The Policy Shop: Numbers don’t lie

This edition of The Policy Shop is brought to you by director of fiscal and economic research Bryce Hill.

They say numbers don’t lie. If so, Illinois communities are now faced with an undeniable truth: 85% of them experienced population decline in 2022, with Chicago, the heart of our state, suffering a loss of nearly 33,000 residents. There were 1,108 of Illinois 1,296 cities and villages that lost population in 2022, according to data released May 18 by the U.S. Census Bureau.\

Despite population decline affecting the overwhelming majority of Illinois communities, the state’s shrinking population is disproportionately concentrated in Chicago.

Chicago lost 32,990 residents from July 2021-July 2022, the second-most of any city in America. Only New York City lost more people than Chicago during 2022.

The loss of 33,000 people is equivalent to a small city disappearing. This is not a mere footnote in a report: it’s a headline spelling out in bold letters that we need to do better.

Ignoring the (data) science. We are a nation that trusts some government numbers, but not all. Our favorite datasets are always the ones that tell us what we want to hear.

But here’s the thing about data: it doesn’t care about what we want. It just provides information. Many of the people who report on data, like me, just care about the facts. Somehow, that can be seen as controversial.

Still, that hasn‘t stopped U.S. Rep. Raja Krishnamoorthi, a Democrat from the Chicago suburbs, from launching an outright crusade against government data.

“While the Census Bureau has begun efforts to address these undercounts through expanding outreach to hard-to-count communities and working to cover frequently undercounted populations such as children under the age of four, we need the Census Bureau to immediately implement these and the other necessary changes it has had a year to evaluate to improve the accuracy of its data,” Krishnamoorthi said.

On the other side of the aisle, stuff like this gets you called a conspiracy theorist. Somewhere, someone is assembling a tinfoil hat for Krishnamoorthi.

They just don’t like what the data says. I get it, neither do I. It’s not fun to see Chicago and Illinois lose population year after year. Instead of trying to get the numbers to say something different, how about pursuing a better policy approach?

Population decline isn’t merely about numbers: it’s about individuals, families and businesses choosing to shoulder the cost of a move because opportunities are that much better elsewhere.

The hard truth – and how to fix our population problems. Despite the somber tone of the data, it’s not all doom and gloom. Yes, we face serious challenges. Yes, the path ahead is steep. But we’re not without solutions. The reason Illinois’ population is shrinking is because of politicians’ longstanding failure to curb public corruption and fix our flailing finances. Failing to acknowledge these basic truths helps nobody, especially not the people here struggling to stay here.

It was always clear that once increased federal funding from COVID-19 ran out, Illinois’ fiscal problems would return. Here are a few ideas for where to start solving them.

Cap spending. The most fundamental issue with Illinois’ budget woes is simple: expenditure growth exceeds taxpayers’ ability to pay. This misalignment means Illinois is bound to face either frequent budget shortfalls, perpetually rising taxes or both.

Illinois needs a spending cap to protect taxpayers from continuous tax hikes and to rein in runaway state spending. Because the state for 20 years has spent beyond its means, Illinois has seen:

• the two largest income tax hikes in state history, in 2011 and 2017
• Pritzker enact 20 new tax and fee hikes totaling $4.6 billion in 2019
• voters forced to stop a $3.6 billion income tax hike in 2020
• Pritzker and some lawmakers push a $500 million to $1 billion tax hike on small businesses
• Pritzker threaten to raise the flat income tax by 20%
• Pritzker hike taxes on businesses by $665 million as they recovery from the pandemic and state-mandated lockdowns

A spending cap would eliminate the constant call for these tax hikes.

Spend education dollars on classrooms, not bureaucrats. Illinois has 852 school districts and roughly half of these districts serve only one or two schools. As a result of all that administrative duplication, Illinois ranks fourth in general administration spending per student. It spends significantly more than all other large states at $558 per pupil, according to the most recent Census Bureau data.

If Illinois reduced its general administrative spending to the national average per student, it would save nearly $515 million in unnecessary costs that could be reinvested in the classroom to improve student outcomes or returned to overburdened property taxpayers. A bill to achieve this goal – sponsored by suburban Democratic state Rep. Rita Mayfield – previously passed the Illinois House of Representatives unanimously, but never received a full vote in the Senate. To be clear, this is not a policy proposal to shutter local schools, it’s a plan to refocus all education spending on the classroom, where it belongs, instead of propping up too many layers of educational bureaucracy.

The (pension) elephant in the room. From fiscal year 2000 through 2022, a 584% increase in inflation-adjusted pension spending was accompanied by a 20% decline in spending on a range of core services.

We can’t let our state operate as a public pension fund above all else. Doing nothing endangers the long-term retirement security of Illinois’ public servants, along with the ability to provide core services. The only pension protection that ultimately guarantees a secure retirement for public workers is a sustainable, fully funded pension system. A “hold harmless” pension reform plan, similar to one originally developed by the Illinois Policy Institute and based loosely on bipartisan 2013 reforms, could help to eliminate the state’s unfunded pension liability and secure retirements for pensioners.

Bottom line. Those three ideas are just a start. We can’t deny the numbers. We can’t turn a blind eye to the realities they represent. It’s time to get to work. It’s time for resolve, not resignation

After all, there’s another truth about numbers: we have the power to change them.