A proposal that would make residential property owners pay an additional 1 percent special assessment over and above their existing property tax bills to help bail out five under-funded state pension systems has two conservative politicos steaming.
State Sen. Kyle McCarter (R-Lebanon) said he sees bad ideas formulated into policy in Springfield "all the time." But the one proposed last week by the Federal Reserve Bank of Chicago that would add to property owners' existing tax bills for 30 years "is one of the worst ever," he said.
McCarter said the idea condones the state legislature's "fiscal irresponsibility" and "punishes every hard working person" in the state.
"I'm afraid they many may just give up," he said. "They'll be stranded living in a state where politicians refuse to take responsibility."
He called Democrats who enjoy the majority and control the legislative agenda as "having an insatiable appetite for spending. It's more important than anything, even peoples' livelihoods."
McCarter's term in the state senate is nearing the end as he awaits a confirmation hearing in the U.S. Senate to serve as ambassador to Kenya. He was nominated to the post by President Trump in March.
Seeking election to State House District 112 - a position he previously held for two terms - Republican Dwight Kay of Glen Carbon said the idea of taxing property owners beyond their current burden isn't just bad, it's "politically unconscionable."
Kay said people cannot afford an additional heavy tax burden and if this one is implemented, they will be "flying out of Illinois," he said.
"If you want to open more doors to leave Illinois, just run this kind of cost-shifting back to taxpayers."
If implemented, a 1 percent increase would mean an additional $2,500 for a home valued at $250,000 and $5,000 for a home valued at $500,000.
Kay said that tax bills are already too high, and the higher they go the more properties will lose value.
"You are a renter," he said. "You are renting."
He also believes legislators will seriously consider passing this kind of legislation, though he believes courts would intervene to enforce "something not as crazy as this."
"I think it's more than a proposal," he said. "I think it's very serious and that Mike Madigan wants to pass this. He has wanted to shift costs back to districts and let them figure out how to pay."
Kay is running against incumbent State Rep. Katie Stuart (D-Collinsville) in November. Stuart defeated then incumbent Kay in 2016.
According to state officials, the unfunded pension liability is estimated at more than $129 billion.
"Because the debt is so large, it’s unrealistic to think that new taxes (such as a tax on legalized marijuana or financial transactions) or increases that affect only a narrow segment of the population will be enough," states the Federal Reserve Bank of Chicago's policy statement published May 7.
"In our view, Illinois’s best option is to impose a statewide residential property tax that expires when its unfunded pension liability is paid off. In our baseline scenario, we estimate that the tax rate required to pay off the pension debt over 30 years would be about 1%."
Mark Glennon, former corporate attorney and venture capitalist who currently serves as executive editor of Wirepoints, wrote about the Fed's proposal on May 12, calling it "among the most blatantly inhumane and foolish ideas we've seen yet."
"Is the Chicago Fed blind to human consequences?," he wrote. "Confiscatory property tax rates have already robbed hundreds of thousands, maybe millions, of Illinois families of their home equity — probably the lion’s share of whatever wealth they had."
Glennon pointed to Illinois' ranking as having the highest property tax rate in the nation, a median rate of 2.67 percent. However, many communities in Illinois have even higher rates - up to 5 percent of home value, he wrote.
He also poked at the Fed's reasoning for hitting up property tax payers.
“New taxes wouldn’t affect people thinking of moving to Illinois," according to the Fed. "While they would have to pay higher property taxes, that would be offset by not having to pay as much for their new homes. In addition, current homeowners would not be able to avoid the new tax by selling their homes and moving because home prices should reflect the new tax burden quickly.”
Glennon wrote: "In other words, just confiscate wealth from current owners because they will pay, whether they stay or not, through an immediate reduction in home value."