Illinois faces a higher unfunded pension debt than any state in the nation, and the failure of Gov. J.B. Pritzker’s Fair Tax Amendment ensures even a partial solution is off the table. The governor’s proposal, shot down by voters on Nov. 3, would have amended the state constitution to allow a graduated income tax, replacing the present flat tax.
It’s a key issue for anyone in commercial real estate. The growing size of the unfunded pension obligations, which now stand at $139B, corrodes the state’s ability to fund public education and puts pressure on local governments to kick in more for schools, according to CoStar Group Director of Market Analytics Brandon Svec.
“Ultimately, local governments will be forced to hike property or other taxes, and a lot of times that means commercial property owners will face higher costs,” he said.
High property taxes are a hot-button issue across the state, with many commercial owners already crying foul that current tax rates hamper new investment and development. But cutting pension payments is both politically toxic and unconstitutional, leaving Pritzker with an array of bad options, ranging from boosting the flat…
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