No sane policy leader in California disputes the severity of the pension crisis, which has already manifested itself by significant impacts on other government spending. This is called “crowd-out” – the phenomenon of an increasing share of a government entity’s general fund having to pay down debt as opposed to paying for services such as police, fire, libraries, schools and trash collection.How bad can “crowd out” get? In the city of Chicago, only a nickel of every dollar generated from property taxes goes to city services while the remaining 95 cents goes to debt reduction. Taxpayers in Illinois, like taxpayers in New Jersey, New York and Ohio, are fleeing those states for lower-tax states. And the out-migration of California citizens because of high taxes is well documented. Much of these demographic changes are being driven by the nationwide pension crisis.
One troubling trend remains Illinois’ population loss that has continued for five consecutive years. “We’re losing 85,000 residents just to other states every year,” Klenke reported. He attributed part of the movement to job opportunities elsewhere; however, the trend has shifted from neighboring states to Florida and Texas. Baby boomers are moving, along with working-age individuals. A contributing factor is the decline in the state’s birth rate.
Pension stampede staring in Illinois. A double whammy.
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