Press

TUA President Jim Tobin was quoted by the Daily Herald in a front-page story about local municipal budgeting.

An improving real estate market means some suburbs are bringing in far more in real estate transfer taxes than they expected.
That’s good for home sellers and towns, and it should be good news for property taxpayers by reducing what they pay for municipal services.
But most of the towns are vastly underbudgeting the real estate transfer tax revenue, which leaves no opportunity for relief on property taxes.
According to a Daily Herald analysis of 19 suburbs that charge a real estate transfer tax, 17 took in a combined $5.6 million more than budgeted during the most recent fiscal year.
The tax usually amounts to about $900 on the sale of a $300,000 house and often is paid by the seller.
Local officials say they’re budgeting conservatively after the housing bust of the Great Recession.
Critics say the towns are holding on to money they should rebate to residents.
“The reason for underbudgeting is so they don’t have to provide property tax relief,” said Jim Tobin, founder of Taxpayers United of America, a Chicago-based group that fights tax-hike measures throughout the country.
In Naperville, the tax was expected to generate $2.9 million last fiscal year. Instead, it generated more than $4.5 million, a 54 percent increase above the budget target.
“That’s a big miss,” said Bill Bergman, director of research for Truth in Accounting, a group pushing for more uniform, understandable and accessible government financial reporting requirements. “But we tend to see underestimated expenses and overestimated revenues.”
This year, Naperville officials budgeted revenues from the real estate tax at more than $3.8 million, but finance officials are already adjusting their expectations.
“We are now projecting it to come in at around $4.2 million, which is still down from last year,” said City Manager Doug Krieger, adding that property tax levies take time to adjust.
“We monitor this, and if revenues are exceeding expenditures, the relief goes to property tax. But once you levy, you’re always stuck with the levy.”
Along with the state and all counties, home-rule communities are allowed to levy a real estate transfer tax. The majority of suburbs charge at a rate of $3 per $1,000 of the purchase price.
Home-rule suburbs used to be able to enact the tax at will, but it became so controversial that in 1997 legislators revoked the power.
Now, home-rule communities have to seek voter approval to levy the tax. And suburbs already levying the tax also have to seek voter approval to increase the tax rate, according to state law.
“It’s just another super taxpayer ripoff,” Tobin said. “The best way to get rid of the abuse is to get rid of home rule.”
That would also eliminate a municipality’s ability to raise property taxes to cover the lost revenue because tax cap laws would be reinstated, he said.
The uncertainty of the tax revenue — particularly since the collapse of the real estate market in 2008 — has made some finance officials overly cautious when it comes to budgeting, many said.
“I think that’s a fair assessment,” Krieger said. “But the health of that revenue stream is tied to two things: the average value of the transaction and the number of transactions. Which, especially in recent years, has made the transfer tax revenue very volatile.”
While many towns simply funnel the tax revenue into the municipality’s general fund, some designate the dollars for capital improvement projects.
“Because we use it to fund streets and sidewalks, if we get a little more money, we fix a little more sidewalks,” said Christina Coyle, Glen Ellyn’s finance director.
Glen Ellyn received $106,703 more than what was budgeted last year, which translates to 19 percent more than anticipated.
Still, Coyle is budgeting transfer tax revenues to come in about $31,000 less than the $656,703 the village received at the end of the last fiscal year.
“What we’ve budgeted is pretty consistent with what we’ve received,” she said. “I wish I had a crystal ball.”
Two suburbs, Addison and Hanover Park, took in less real estate transfer tax revenue than what had been budgeted.
Greg Peters, interim finance director at Hanover Park, said the unknowns of the real estate market make forecasting transfer tax revenues harder than other revenue sources. And it might not be as big a priority to get it right as with other funds.
“Every finance director will do (the forecasting) differently, and some will spend more time on it than others,” he said.
“As a rule, you want to be relatively conservative on revenues and assume the worst on expenditures and you almost always come out good.”

TUA’s Executive Director Rae Ann McNeilly discussed Illinois’ public pensions in this article from Illinois Watchdog.

SPRINGFIELD – While Illinois politicians wrestle with how to tame the state’s ballooning pension shortfall, some of those leaving elected office in January will contribute to the problem by drawing large pensions of their own.
For example, three statewide candidates rejected this year by voters will be eligible for hefty pensions.
Gov. Pat Quinn will be eligible for $136,000 in pension payments per year when he retires in January. His pension is for the time he served as governor, lieutenant governor, treasurer and as an aide in Gov. Dan Walker’s administration.
State Treasurer Dan Rutherford failed to gain the GOP nomination for governor but will be eligible for an $115,319 pension in January. The pension is for his time as treasurer and as a state legislator.
State Rep. Tom Cross, R-Oswego, lost his bid for state treasurer but still can collect an annual pension of $81,016 based on his time as a state lawmaker. Cross has served as House minority leader, but was able to maintain outside employment as a lawyer.
In addition to their pensions, lawmakers first elected before Jan. 1, 2011, are eligible for free health insurance for their rest of their lives if they served at least four years in the General Assembly.
Lawmakers can begin receiving their pensions at age 55 once they are fully vested. To be vested in the system, a lawmaker or other state elected official, who entered office before 2011, need only to have served four years.
“Legislators shouldn’t receive a pension for a part-time job. In many ways, they are insulated from the realities the rest of us are. They have their retirements provided for. They have health insurance provided,” said Rae Ann McNeilly, executive director of Chicago-based Taxpayers United of America.
She suggested that instead of providing lawmakers with pensions, legislators should save and invest for their own retirements.
But not everyone agrees with McNeilly’s assessment.
For example, state Sen. Mike Jacobs, D-East Moline, said he deserves the pension he will receive.
Jacobs, 54, lost his bid for reelection Nov. 4, but he will be eligible to begin drawing his $34,579 pension next year based on his 10 years of service in the Illinois Senate.
“Public life is very difficult. A lot of people don’t realize how much you put into it,” Jacobs said “If I’ve got 10 years in I’ve earned every damn cent of it. I’ve been attacked and ridiculed. It’s been very difficult on my family. It’s not an easy life.”
But McNeilly said there is an inherent conflict of interest for judges, lawmakers and senior policymakers to be drawing state pensions while making decisions on the state’s pension liabilities.
“These people working for government for the most part earn more than they would if they were in the private sector, they collect far larger pensions. In fact, most people in the private sector aren’t eligible for a defined benefit plan. Our retirements are subject to the ebbs and flows of the marketplace, but we are being told that we have to support government pensions to protect them from the ebbs and flows of the marketplace.”
Eileen Norcross, a senior research fellow at the Mercatus Center at George Mason University took a different tact.
“Illinois has the worst-funded pension system in the nation. It would show some real leadership if these elected officials would step away from pensions and go to defined contribution [410-k type] plans. Think of all of the teachers and other public workers who face diminishment of their benefits because the money is not there.”
In fact, two lawmakers leaving the General Assembly, State Rep. Rep. Josh Harms, R-Watseka, and Brad Halbrook, R-Shelbyville, opted not to participate in the pension system altogether.
After losing an election or retiring, lawmakers frequently return to Springfield to pursue lucrative careers as lobbyists. They also can take jobs in the executive branch, which can further boost their pensions.
Jacobs said he does not plan to lobby or pursue a state job, but is not sure what he will do when he leaves office in January.
“I think I’m going to use my considerable talents somewhere in the private sector,” he said.
Gov. Quinn has not responded to media inquiries about his plans after leaving office. And Treasurer Rutherford was not available to discuss his future his spokeswoman said Thursday.
Of course, it isn’t just those who lost on Election Day who will be able to collect state pensions now.
For example, state Rep. Mike Bost, R-Carbondale, won election to the U.S. House of Representatives where he will receive a salary of $174,000 from U.S. taxpayers. And he is eligible to collect an annual pension of $73,0176 from the state of Illinois while he is in Congress. Bost served 20 years in the Illinois General Assembly.
Bost told Illinois News Network that he has not decided whether to begin collecting his pension when he turns 55 next year.
But he added he believes the state’s pension system is in crisis and believes Illinois should either reduce pension benefits for new hires or put them into 401-k type plans.
“Something has got to be done, the state can’t just go bankrupt,” he said.

TUA’s pension project on Champaign and Decatur, Illinois, is featured in this news story from WAND-TV NewsCenter 17.

 
Wandtv.com, NewsCenter17, StormCenter17, Central Illinois News-
Decatur – Taxpayers United of America is providing government pension information at its website taxpayersunited.org. The taxpayer watchdog is highlighting pensions for retirees of the cities of Decatur and Champaign. Both Macon County & Champaign County, along with school districts in those counties. And the University of Illinois & Richland Community College.
Hundreds of retired local government retirees are getting multi-million dollar pensions,” said Rae Ann McNeilly, executive director of TUA. “It is past time to bring government pay and benefits in line with private sector compensation because simple math tells us that we can’t tax our way out of financial debacle.”
Taxpayers United is calling on the legislature to end defined benefit pension plans for new government employees. Instead TUA would prefer to see 401-k style pension plans.
The Social Security Administration says the average life expectancy of an individual is about 85 years. That would mean retirees retiring in their 50’s and 60’s could collect pension benefits for 30 year or more.