Poor Governance Fuels the Illinois Exodus
Illinois has a population problem: Our population has been shrinking faster than any other state (except one). The Chicago Tribune Editorial Board and others call this the Illinois Exodus.
Population changes are a measure of governance quality. We are free to choose where to live, and the United States offers 50 different states and thousands of different localities, each governed in different ways. People consider many factors when choosing where to live, and how a state is governed can be a significant factor in that decision. Over time, people migrate toward places that are governed well and away from areas that are governed poorly.
Illinois’ governance is rife with problems: Our state offers residents and potential residents a high tax burden, high government indebtedness, both in an absolute and a per capita basis, and high and growing crime rates in our cities.
According to the U.S. Census Bureau, from 1900 until 1970, when Illinois amended its Constitution to authorize an income tax and to prohibit future reforms of public pensions, Illinois was among the fastest growing states in the country. Since then, the population growth faded, and then Illinois started to shrink as its tax burden and indebtedness continued to grow.
Gov. J.B. Pritzker and House Speaker Michael Madigan are working together to amend the state constitution to increase the tax burden even further. Advocates for their proposal claim higher tax rates are “modern” and people will stay and pay those rates. Really?
Consider a recent study by SmartAsset, a financial website, of the states to which high income millennials, the next generation of entrepreneurs and leaders, are moving. Illinois is among the least attractive states for millennials; only one other state is more unattractive.
So, what’s driving this migration of the young and ambitious? Truth in Accounting’s Bill Bergman compared the 10 most attractive states in the SmartAsset study to the 10 least attractive states according to several factors, including average winter temperature. He found that average winter weather is not a statistically significant factor in choices by millennials. The factors with the greatest statistical significance pertain to governance: Millennials are moving away from states that have more lawyers per capita (a proxy for regulatory burdens) and higher taxpayer burdens, both in terms of current taxation and expected future burdens based on indebtedness. They are moving to states with fewer rules and less-costly government.
This result is consonant with common sense: People look for values in all areas of their lives -- why not with respect to governance as well?
Illinois, which ranked second-to-last in the SmartAsset study, also ranked second-to-last in Truth in Accounting’s latest “State of the States” study of state government finances. Truth in Accounting’s “Taxpayer Burden” measures unfunded government obligations, including bonded debt and government employee retirement benefit promises. It represents the burden that past politicians have accumulated and loaded on future taxpayers, such as millennials.
In a recent Gallup poll, Illinois ranked dead last in the 50 states on trust in state government. Public corruption plays a big role in that ranking, of course, but trust in Illinois government management of finances also helps explain why people have been voting with their feet.
Does anyone actually believe that raising taxes further, and thereby raising the cost of living, of building a business or raising a family here, will make Illinois a more attractive place to live? Not likely: The proposed tax hike would exacerbate the Illinois Exodus, further reducing property market values and increasing the expected tax burden on those who remain.
This piece originally appeared in the Chicago Tribune.