Illinois Press

Taxpayers United of America’s (TUA) President & Owner, Jim Tobin,  was quoted on the featured BGA story on Chicago Tonight.

A movement is underway to have the Illinois legislature expand what’s called “home rule authority,” according to a new report from the Better Government Association. What exactly is home rule and what could it mean for towns and villages throughout the state?
Bob Reed, director of programming at the Better Government Association, says home rule gives communities “more control.”
“It’s basically a legal standing that allows towns of over 25,000 [people] to tax, issue bonds, do other financial engineering and economic development and make a number of other decisions for their communities, such as privatizing certain services, like garbage collection or water, and changing zoning,” Reed said. “Basically, it gives communities more control in both how they finance and how they will run their communities.”
According to Reed, out of 1,297 municipalities in Illinois, 211 currently operate under home rule, which was first introduced in Illinois in 1970 as an amendment to the state constitution.
The Illinois Municipal League is working on legislation that would expand home rule to communities with over 5,000 people with an amendment to the Illinois constitution. But that legislation would have to make it through the General Assembly before it gets to the ballot in November.
Reed said the chances that home rule will be on the ballot are “slim to none.”
“I wouldn’t rule it out 100 percent, but it’s highly unlikely,” Reed said. “What this really is, is a warm-up act. What the Illinois Municipal League is signaling here is the state’s 1,297 municipalities are hurting. These towns and villages are concerned that even if a state budget is passed, the state could hold back money. So they’re looking at the taxpayer as a way to relieve some of this pressure and uncertainty so they can move forward with plans and fully funding their day-to-day operations.”
Reed said that even with the state budget stalemate, home rule is still a tough sell to voters.
“Most people, when they hear home rule, think more taxes. But on the other side, you have the people who run the government and unions who want home rule to pay for better schools and better services,” Reed said.
“[What is] important to remember here though is that home rule by itself won’t solve the financial problems for communities,” Reed said. “Municipalities need to also deal with reforming pensions, consolidating government, and where possible, consider privatizing services. Home rule is just one tool in the package for municipalities.”
Reed joins “Chicago Tonight” to further discuss home rule and what that could mean for Illinois communities.
Below, the full report from the Better Government Association.
Cash Scramble! Illinois Towns Eye Home Rule

Fearing a loss of crucial state funds, municipalities are pushing lawmakers to expand local taxing powers and fees. Business and tax watchdogs say, “no way”, a BGA Rescuing Illinois report finds.
By John T. Slania
The budget stalemate and political rancor in Springfield has prompted Illinois municipalities to take matters into their own hands.
With Illinois lawmakers and Gov. Bruce Rauner unable to agree on an annual budget, local communities fear the loss of money traditionally distributed to them by the state.
This threated shortfall has cities, villages and suburbs throughout Illinois seeking new ways to raise cash on their own in order to pay for public works projects, residential services and everyday operating expenses, a BGA Rescuing Illinois report finds.
The Illinois Municipal League, a statewide advocacy group, is promoting legislation that would give more local cities and villages direct control over the collection and distribution of public funds. Specifically, the organization is backing a bill that would expand the number of communities eligible for “home rule” status, which would allow them to raise more money through local taxes and fees.
If the proposal were passed through a constitutional amendment, it would double the number of home-rule communities in Illinois to nearly 400.
“The continued budget impasse has made it difficult for municipal finances. We want to give local governments more control over their own destinies,” said Brad Cole, executive director of the Illinois Municipal League (IML), which represents 1,297 villages, towns and cities across the state.
But the proposal faces stiff opposition from a host of powerful lobbying groups and tax watchdogs who argue that local governments would be granted broad powers to raise taxes and fees, a burden that would largely be shouldered by businesses and residents.
“Illinois already has some of the highest property and sales tax rates in the nation. If you allow more communities to become home rule, it only adds to the taxes on consumers,” said Rob Karr, president and CEO of the Illinois Retail Merchants Association, which opposes the expansion of home rule.
A looming threat
The impetus for the home-rule legislation is the threatened loss of funds distributed by the state to local communities. And these threats have become very real as Republican Gov. Rauner battles Democratic House Speaker Michael Madigan over a heap of budget issues, a struggle that’s gone on for nearly a year.
Their inability to pass a state budget temporarily cut off funding the state dispenses to municipalities through motor fuel taxes, casino and video gaming taxes, use taxes, and 911 surcharges on phone bills. When municipalities panicked, lawmakers and Rauner agreed in December to restore those payments even though they were unable to pass an overall budget.
The other worry is that Rauner will cut funding that municipalities receive from the state through income tax collections. In his 2015 budget address, Rauner said he wanted to reduce the amount traditionally released through the Local Government Distributive Fund, which would reap $600 million annually for the debt-ridden state coffers.
For some local governments, loss of those revenues could represent up to 20 percent of their operating budgets.
The ongoing state budget impasse has delayed any action on Rauner’s proposal. But all this financial uncertainty has made local communities edgy, prompting the Illinois Municipal league to float the home rule expansion measure this legislative session.
“All of these possible revenue losses are why it’s important for local governments to have more control over their finances,” Cole said.
History of home rule
Home rule was added with passage of the 1970 Illinois Constitution, with this broad definition:
“…A home-rule unit may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax, and to incur debt.”
The constitution automatically gave home rule powers to units of local government with populations of 25,000 and above. Those units of government include cities, towns and villages, counties and townships. Local governments under the 25,000-population threshold could also become home rule through a voter referendum.
Over the years, communities have used home rule power less for issues of “public health, safety, morals and welfare,” and more to raise revenues through taxes and fees, municipal experts note.
A home-rule community, for example, is not bound by a state law that caps annual municipal property tax increases to 5 percent or the rate of inflation, whichever is lower.
And home-rule communities can generate money from sales taxes, gasoline taxes, hotel/motel taxes, and real estate transfer fees taxes, among others.
Today, there are 211 home-rule communities among the 1,297 municipalities across the state. Most have earned that designation by exceeding the 25,000-population threshold.
Others have achieved the designation through voter referendums. But this is, at best, a 50-50 proposition.
Of the 191 home-rule referendums on the ballot between 1970 and 2000, 97 passed and 94 failed, according to the last definitive study, a 2002 report from the Center for Governmental Studies at Northern Illinois University.
In the recent Illinois March primary, Summit voters approved the village’s home-rule referendum, while similar measures failed in Franklin Park and Westchester.
“The reason many of these fail is that people are afraid you’ll raise their taxes. You have to gain their trust and convince them you won’t abuse the power,” said Summit Village President Sergio Rodriguez, who worked to gain passage of his village’s home-rule referendum by a narrow margin of 954-820.
Expanding home rule
The Illinois Municipal League is proposing a different route: amend the Illinois Constitution so the population threshold for home-rule communities is lowered to 5,000. That would allow another 173 communities to gain home rule.
More communities need this measure because of the budget uncertainty in the Illinois general Assembly, said State Rep. Mike Smiddy (D-Hillsdale), sponsor of the measure. He’s heard from mayors who have seen losses or delays in state distributions to municipalities of motor fuel taxes, used to repair local roads, and 911 phone surcharges, used to run emergency dispatch centers.
“The issues we are having in Springfield make this legislation more viable,” Smiddy said. “Municipalities are being held hostage because they have to rely on everything coming from the state. We have to give local communities every chance to succeed.”
But the measure faces many obstacles to gaining passage.
Smiddy’s bill currently sits in the Illinois House Rules Committee. With little evidence that lawmakers and the governor will agree on a budget or any other major issues, most observers have doubt about the home-rule measure.
“This is something that is going to require some heavy lifting. And this is a legislature and governor who do not do heavy lifting on anything,” said David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University.
Even if the bill were to make it out of committee, because it is a constitutional amendment, it would require approval of three-fifths of the lawmakers in the Illinois General Assembly for it to become a referendum on the ballot.
Then three-fifths of the voters would need to vote in favor.
“I don’t think lawmakers are in the mood to do anything that would allow local officials to raise taxes,” Yepsen said. “Then, where do you think you will get the votes on a constitutional amendment asking voters if they want their taxes raised?”
Opposing forces
Then there are outside opponents both big and small. Among the big: the Illinois Retail Merchants Association and the Illinois Association of Realtors. Retailers and restaurateurs fear additional sales taxes, and real estate agents complain that home-rule communities raise property taxes and tack on taxes and fees to the sale of property.
“Whenever a community has home-rule powers, you’ll see new inspections and fees and transfer taxes. Transfer taxes are paid by the seller because local official want to charge the person leaving town,” said Mike Scobey, assistant director of government affairs for the Illinois Association of Realtors.
“And home rule communities are exempt from the property tax-cap statute,” Scobey continued. “It may not happen right away, but it could happen over time.”
If the powerful lobbies can’t keep the amendment from leaving the floor of the General Assembly, the tax watchdogs are lying in wait.
“Home rule means home ruin,” said Jim Tobin, president of the Taxpayers United of America, a Chicago-based tax watchdog. “If it ever becomes a ballot referendum, we’ll defeat it easily.”
Brad Cole, executive director of the Illinois Municipal League, said the focus of the home-rule measure shouldn’t entirely be on raising revenue. He mentions a 2011 study from the Center for Governmental Studies at Northern Illinois University suggesting that a town’s debt rating rises simply because it is a home-rule community. That’s because the bond ratings services know the municipality has more sources of potential revenue, according to the study.
No matter which side of the home-rule argument people may fall, Cole thinks the inaction in Springfield makes the time ripe for a referendum.
“All we want is for the General Assembly to put the issue before the people,” Cole said. “We’re not asking lawmakers to take a position. Let the voters decide.”

Taxpayers United of America’s (TUA) Director of Operations, Jared Labell, was quoted by Madison Record about the recent State University Retirement pension data analysis.

Former Southern Illinois University-Edwardsville chancellor David Werner is among the highest paid beneficiaries of a state pension system that has $22.4 billion in unfunded liability.
Werner, who retired at age 62 in 2004, receives $252,704 in benefits annually from the State Universities Retirement System (SURS). To date, he has collected $2,487,936. He contributed a total of $246,018 into his retirement. At age 85, he will have received $5,724,518 in payments – 95 percent of it from taxpayers.
In its analysis of a pension fund that benefits state university staff, administrators and faculty, Taxpayers United of America (TUA) says that SURS is in “dire need” of reform.
TUA director of operations Jared Labell said that individual SURS’ retirees are some of the highest paid state employees, and therefore are the biggest pensioners.
Labell noted that for every dollar a SURS government employee contributed to their own retirement, taxpayers matched with a subsidy of $4.67.
He said that last year, a SURS financial officer warned that the system faces a risk of having assets depleted in less than 10 years.The investment official, Daniel L. Allen,, wrote in a memo that Investment policy alone could not close the plan’s deficit because it is “too large.”
While there are 69,381 active members in the politically controlled SURS defined-benefit plan, there are approximately 12,000 active members of a self-managed retirement plan that is similar to a 401(k) style plan.
Labell said the self managed plan, which has been offered to state university employees for nearly two decades, gives government employees more power over their own retirement savings fund.
He said that the self managed plan makes “retirement costs more sustainable over time, and protects taxpayers from budgetary uncertainty from year to year.”
“If the (self managed plan) option was given to all current state employees and mandatory for all new hires, this one reform would go a long way in improving Illinois’ unfunded government pension liabilities,” Labell said.
SURS statistics:
• 3,955 collect pensions in excess of $100,000;
• 15,628 collect pensions in excess of $50,000;
• The average 2016 annual SURS pension is $35,751;
• The average amount that employees paid into their own pension fund is $48,764, or 5 percent of their estimated lifetime pension payout;
• The average estimated lifetime payout is $947,211;
• The average age at retirement is 61;
• The average years of employment are 18;
• The net return on investment for SURS in fiscal year 2015 was only 2.9 percent, or $593,600,000;
• In fiscal year 2015, taxpayers paid $1,590,900,000 into the government pension fund;
• In fiscal year 2015, SURS government employees paid $340,000,000 into their own pension fund; and
• At the end of fiscal year 2015, SURS had a 42.37 percebt funded ratio with a $22.4 billion unfunded liability.
“As funding shortfalls accrue for SURS and the other government pension funds, Illinois’ political caste will be to blame for the bankruptcy of their constituents and the eventual reduced benefits for pensioners,” Labell said.
“Continuing the defined benefit pension system in Illinois guarantees that a constitutional crisis will ultimately erupt between the state constitution’s pension protection clause and the insolvency of the pension funds. The unions, bureaucrats, and politicians will argue for expanding the tax burden of Illinois residents to fund their pensions, but tax hikes and cutting of services will not solve this problem, only systemic reform will.”
In its press release, the TUA listed the top 200 beneficiaries. Werner was 55th on the list.
At the number one spot was retired professor of oral and maxillofacial surgery from the University of Illinois-Chicago, Dr. Leslie Heffez, who collects $564,298 in annual benefits. Heffez retired at 55, and his accumulated pension payout is estimated to be $22.3 million.
“Without systemic reforms, the problem of government pensions will only get worse over time,” Labell said.
“What many in the political class don’t seem to understand is that there is a breaking point, and eventually ever-higher tax increases will cause taxpayers to leave their city, county, or state for areas that are more economically friendly – commonly referred to as ‘voting with your feet.’”

Taxpayers United of America’s (TUA) Founder and President, Jim Tobin, leading The Chicago Tax Revolt of 1977 was discussed by Chicago Tribune.

There’s a simmering resentment in Illinois and America. Sometimes it boils over, and you see anger at Donald Trump rallies. Mostly, though, you see resigned frustration in the faces of Chicago teachers walking off their jobs. There’s a sense of defeat among the South Side Oreo cookie-makers protesting at the Kenilworth home of the Nabisco CEO.
They’re the working chumps. They believed if you worked hard all your life you’d be able to enjoy a few years of happy retirement with your grandchildren. They didn’t count on having to pay $300,000 annual pensions for public workers who enjoy a slightly more comfortable retirement.
I’m not sure how old I was when I started working, but I think I was about 8. My first job was selling tomatoes in the neighborhood for nickels and dimes. Our parents raised 12 kids and Dad grew up on a farm in Michigan. We had a huge garden in our west suburban backyard. Dad would freeze it in the winter so my brothers could play hockey.
Mom and Dad would take us up to Michigan, where we’d pick green beans, blueberries, strawberries, apples, pears or whatever fruit or vegetable was in season. Then they’d can them or make preserves at home later. If the weather was good, we’d stop at the beach when the picking was done.
Sometimes we’d stop at Dairy Queen for a treat. Sometimes we wouldn’t, and we were told it was because we’d misbehaved. Years later they told us that some days they just didn’t have the money to buy us 35-cent cones.
If our parents ran our family like the state runs our government, we’d have had ice cream every day and just put it on the credit card.
My first real job was at 14 as a dishwasher in a Poppin’ Fresh Pies restaurant. You had to be 16 to work, but I took my birth certificate to the library, made a copy, and used Liquid Paper and a typewriter to change a 5 to a 3 and make me two years older so I could work.
Restaurants are a good place for young men with healthy appetites to work, and through high school and college, I worked as a cook at Wolf’s Head Inn in Indian Head Park and later as a waiter at Candlelight Dinner Playhouse in Summit.
When I graduated from college with a journalism degree I worked as a reporter for my hometown weekly newspaper, The LaGrange Sun. The paper closed a few years later, and back then the best offer I could get as a reporter was $300 a week, about $15,000 a year. It wasn’t enough, so I spent the 1990s working concrete.
To this day, every morning when I wake up, the first thought as I open my eyes is, “Thank God I don’t have to do concrete today.”
Concrete work is hard, possibly the hardest of the trades, though roofers don’t have it much better. Painters have it easiest. Plumbers, carpenters, electricians — they all get to walk on solid ground and stay clean for the most part.
Concrete guys are down in the mud, setting forms for footings and foundations upon which the rest of the house is built. The mud gets everywhere — all over your clothes, in your vehicle, in your home. There are a few nice days where you’re actually glad you get to work outside, but most of the time it’s too hot or too cold, too windy, too wet or too dry, which makes the ground too hard to dig.
After concrete, I got back into newspapers and later, public relations. Now, I’m back in newspapers. Except for a few short periods as a freelancer, I’ve been working almost every day for about 35 years.
I get upset when public servants are awarded overly generous retirement benefits. I don’t necessarily want to vilify the individuals; it’s the system that’s broken. I’m mad at the state leadership that does nothing to fix it.
This is a completely normal reaction. Most honest, hard-working people believe that others shouldn’t get something for nothing. In 1976, while I was walking the neighborhood selling tomatoes from a basket, Ronald Reagan was pounding the campaign trail with a story about Chicago’s “welfare queen.”
Reagan never mentioned her by name, but she was real. Her name was Linda Taylor, but she had 33 aliases. Pulitzer Prize-winning reporter George Bliss of the Chicago Tribune coined the term “welfare queen” to describe how she committed fraud on a grand scale, driving a Cadillac to the welfare office to collect hundreds of thousands of dollars in benefits.
People were outraged then, and would audibly gasp at campaign rallies when Reagan said how much she made. Now we’ve legalized and systematized a different kind of fraud on a magnificent scale, and taxpayers are funding outrageous benefits for a privileged class of public workers.
Forty years ago, some people in Illinois got really mad and said enough is enough. The Chicago Tax Revolt of 1977 started in the northern suburbs of Cook County when property taxes skyrocketed following a quadrennial reassessment. Protesters were led by James Tobin, a libertarian who founded Taxpayers United of America. A year later, Howard Jarvis made the cover of Time magazine for leading the Prop 13 property tax revolt in California.
I’m angry, but I’m not going to hold my breath waiting for the executive, legislative and judicial branches to solve the state’s financial crisis. I equally blame political party leadership, legislators, governors past and present, unions, lobbyists and others for the gridlock and deficit spending.
As for the present state of the state, my personal theory is House Speaker Michael Madigan doesn’t care how bad things get in Illinois. I think he’ll hold on to power until his daughter, Attorney General Lisa Madigan, runs for governor in 2019, then he’ll step down.
Gov. Bruce Rauner doesn’t care if historically black Chicago State University shuts down. I think he’s outraged that half the $4 billion Illinois spent on higher education last year paid for employee retirement benefits. By his logic, state schools should close rather than continue the death spiral of deficit spending.
Working chumps like me are left wondering, where’s the outrage? Maybe we need a “pension king,” someone who personifies the egregious abuses of the state benefits system. Maybe that person becomes a lightning rod for criticism and the subject of so much public anger that state leaders are finally forced to do something about the growing legion of retirees collecting six-figure pensions.