In late November, Gov. J.B. Pritzker proclaimed that Illinois was back attracting new employers and jobs and in the best position in many years to further boost its economy. He cited his successes in luring electric vehicle makers and suppliers to the state and suggested more is on the way, claiming the state’s course has sharply shifted to the positive since Gov. Bruce Rauner’s departure. Illinois may have moved beyond the divisive and chaotic Rauner years, but it is a state in deep crisis.
Let’s take a sobering look at the state of the state.
• Illinois’ population is not growing.
It was one of just three states in the country to shrink in population from 2010 to 2020, and the state’s loss of residents continued in 2021 and 2022.
• Illinois remains one of the least friendly states for residents in terms of taxes and one of the worst states for business.
A WalletHub study last year found that a typical Illinoisan faces a tax burden of 9.38%, placing the state ninth overall in the nation for the heftiest burden. Kiplinger’s tax friendliness reports rank Illinois in the top 10 of unfriendliest states for middle-class families.
Regarding its business climate, Illinois ranks third-worst in the nation, behind only California and New York, according to Chief Executive magazine’s Best & Worst States for Business survey for 2023.
• Illinois’ K-12 public school system claims a portion of taxes at one of the highest levels in the nation, yet its schools are among the worst-performing.
Illinois spends more in property taxes on education than other Midwest states. Roughly two-thirds of all local property taxes go to fund K-12 education in the state. Yet, according to the 2023 Illinois Report Card, just 34.6% of students were proficient in reading and 26.9% in math.
In Chicago Public Schools, it’s far worse, with 26% of third through eighth graders meeting or exceeding reading standards on the 2023 Illinois Assessment of Readiness and 17.5% of students achieving the same in math. Black and Latino students did significantly worse.
Meanwhile, Illinois ended its small tax credit scholarship program for private schools in 2023 and eliminated its independent charter school commission in 2019.
• As for Chicago, the state’s economic hub is in crisis with dire long-term consequences. City businesses are reeling from the impact of COVID-19, rising crime and high taxes.
Office occupancy has flatlined at about 55% of pre-pandemic levels. A comparison of downtowns in the U.S. in 2019 and 2023, conducted by the University of Toronto School of Cities, found that downtown Chicago has had one of the worst recoveries in the nation.
Meanwhile, Mayor Brandon Johnson is dong more damage to the business climate by pushing a hike in the real estate transfer tax, overwhelmingly a tax on depressed commercial properties, while enacting unfunded mandates such as the elimination of the subminimum wage for tipped workers and the doubling of personal time off for Chicago workers. Neither of these new mandates is tied to businesses’ ability to afford them.
• Illinois saw higher violent crime rates at 4.3 incidents per 1,000, compared with 4.0 nationwide, per 2022 reporting data, according to SafeWise’s annual State of Safety report. This is fueled largely by the continuing rise in crime in Chicago.
Pritzker said addressing crime is an ongoing issue but that violent crime in the city of Chicago has been coming down for three years. However, according to the city of Chicago’s Violence Reduction Dashboard, the number of incidents of multiple types of violent crime has grown since 2021.
• Illinois has the largest employee pension obligations of any state in the nation, and the debt is growing.
Illinois state and local government retirement shortfalls grew to a record $530 billion in 2020, the conservative advocacy group Wirepoints reported, citing data from Moody’s Investors Service. That translates to an average burden of about $110,000 in pension and retiree health debt for every household in Illinois.
• Illinois ranks dead last among states on racial equality, according to WalletHub.
Despite the state treating equity as a major priority, a 2023 study by WalletHub ranks Illinois at No. 50 for states. The study looked at the differences between Black and white people based on eight measures of prosperity — poverty rate, homelessness rate, share of unsheltered homeless, labor-force participation rate, homeownership rate, share of executive positions, median annual household income and unemployment rate.
For a state with policies as progressive as Illinois’, the results of the equity study are telling. Raising regressive business taxes and pursuing policies and imposing unfunded mandates on businesses, regardless of their ability to pay, in pursuit of equity will not accomplish that goal. Less economic growth means less opportunity for individuals and a weaker tax base.
In conclusion, the state of the state is not good. By every important indicator — job growth and population growth, state and local tax burden, public education performance and public safety — Illinois is in crisis.
If Illinois is “back,” as the governor says, it is not nearly the progress the state needs.
Paul Vallas is an adviser for the Illinois Policy Institute. He ran for Chicago mayor this year and in 2019 and was previously budget director for the city and CEO of Chicago Public Schools.
Submit a letter, of no more than 400 words, to the editor here or email letters@chicagotribune.com.
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