Short-term Fixes Won’t End Cook County Woes

Published November 28, 2011

Cook County Board President Toni Preckwinkle has governed in a more fiscally responsible manner than her predecessor, Todd Stroger. Unfortunately, her most recent, $2.94-billion budget, which passed 16-1, focused on reducing short-term expenditures and increasing highly regressive taxes on alcohol, tobacco and parking.

These tax hikes will not solve the county’s dire debt problems, with the day of reckoning scheduled to arrive within the next few years. Cook County Treasurer Maria Pappas estimated recently that the 498 governments within Cook County owe a collective $108.3 billion. Of this, $25 billion is due to Cook County’s overpromised and underfunded pension system. While Ms. Preckwinkle did not create those problems, they do require bold leadership to rectify them.

Ms. Pappas estimates that the total debts translate into an average of $63,525 per household in Chicago and $32,901 in the suburbs. This debt continues to tighten around the necks of Cook County residents, and the recently passed tax hikes are merely a glimpse of what’s to come unless serious action is taken.

Ms. Preckwinkle should be commended for following through on her campaign promise to roll back the sales tax hike, but Chicago remains woefully uncompetitive. The city once had the highest sales tax of any major city in the country; now it’s tied for the highest with Los Angeles.

Hiking sin taxes, however, is not the answer. The way to increase tax revenues is to implement pro-growth policies that help improve economic activity, not raising regressive taxes that stifle it. Sin taxes are already so high they drive people away from purchasing the products in Illinois.

Cook County needs to commit to long-term cost-saving reforms that protect taxpayers. Under a “business as usual” spending scenario, property taxes for some communities in Cook County would have to go up 50% a year, every year, for the next five years, just to avert bankruptcy or default. Such increases would trigger a massive flight of residents and jobs from the county and outright abandonment of homes and businesses.

For decades Cook County residents have felt the ever-greater pinch of higher taxes in exchange for an assumed increase in services. Despite what county officials and public employee unions say, these problems can’t be fixed without reforming county personnel costs, which make up nearly 80% of the county’s budget. Moving county employees from traditional pensions to a defined-contribution retirement plan, privatizing county services and renegotiating labor agreements should all be considered.

Ms. Preckwinkle has a tough job ahead of her. Eventually Cook County taxpayers will have to stand up and insist on reform, knowing that maintaining the status quo will come at the expense of their own jobs and pocketbooks.