It's also bad news because the government is going to see long term problems borrowing money, costing the tax payers more to pay back interest on loans for worthwhile projects.
I'm glad fewer people are falling for this since it tends to be lower income individuals who would be better served holding onto their money, but this feels like a net Bad to me.
Been a while since I've looked, but Illinois's credit rating was headed toward junk bond status - like they were literally on step above. I haven't seen anything in the 5 years since that would have changed that direction.
Nothing has changed. The state's debt problems are being mitigated at the moment by prevailing economic growth, particularly pension funds that have enjoyed rising equities. The state is still seeing a large net outflow of property owners and income earners. When the US economy eventually turns downward, if only as an inevitable iteration of the business cycle, the badly worn gears of IL finance will strip entirely clean.
The latest thinking about IL finance emerged[1] from the Federal Reserve Bank of Chicago in April last year; add another 1% to the highest average property tax rates in the nation. It won't raise enough money to actually cover pension liabilities inside a forty year horizon, but one explicit benefit is that it will devalue properties so that "current homeowners would not be able to avoid the new tax by selling their homes." Even better, "people thinking of moving to Illinois" would benefit from lower prices, mitigating the unattractive tax rates, so goes the theory.
No thoughts were offered about the effects of thousands of dollars per year of new property taxes on fixed incomes, working poor or young home owners put under water by property devaluation. No analysis was performed to predict how rapidly the IL emmigration rate will accelerate with more taxes. No evidence was offered to support the concept that some pool of mysteriously tax indifferent IL admirers are standing by to move in once housing prices decline.
I'm glad fewer people are falling for this since it tends to be lower income individuals who would be better served holding onto their money, but this feels like a net Bad to me.