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IPFS News Link • Pensions

Suburban Residents Risk Losing Homes Over Rising Pension Costs

• https://www.zerohedge.com, By Amy Korte

They bought a two-story home in a quiet neighborhood for $315,000. Her property taxes were $7,800 for 2004.

But Hill's home is now worth less than she paid for it back in '03. Meanwhile, her property taxes have done anything but decline. She now pays nearly $10,000 in property taxes.

"Everyone is in shock when I tell them the property taxes. They say it must be an error," Patricia said.

Patricia is not alone. In the 1990s, Illinois property tax bills were around the national average. But in the two decades from 1999 to 2019, we've seen a massive 65% increase in residential property taxes, adjusted for inflation. That increase is what drove Illinois to having one of the highest tax burdens in the nation.

The source of Patricia's – and her fellow Illinoisans' – property tax pains? Public employee pensions.

More than 70% of Patricia's property tax bill goes to the school district. While school districts account for a significant portion of property tax bills in localities across the United States, school district budgets across Chicago and Illinois are getting devoured by underwater pension systems.

While the state is responsible for paying employer pension costs for teachers outside of Chicago, rising pension obligations mean more state dollars are spent on pensions, leaving more classroom costs for school districts to fund through property taxes.

The Teachers' Retirement System, the plan that oversees retirement benefits for teachers and other educational workers outside of Chicago, is funded at 40% as of 2020. This means that for every $1 of promised benefits, the state has set aside only 40 cents to fund that promise.


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