The Consequences of America's Shrinking Cities and States

Americans are on the move. They're leaving various cities and states to avoid high taxes, crime, high costs of living, and to seek better jobs; or, to simply retire.  The downside to this is potential bankruptcies as the tax bases shrink; leaving cities and states with expensive pensions and other commitments that are left over from a time when populations were much higher.

This was certainly the case in the now-bankrupt Detroit.  In 1950, that city's population was 1.8 million. By 2013, it had only 700,000 residents.  But, Detroit's problems -- as the largest city in Michigan -- are taking that state along with it.  Right now, Michigan is on the verge of losing one of it's  Congressional seats due to it's slowing growth.  As a state with nearly 10 million residents, the population increased by only 6,270 from 2014 to 2015; according to the Census Bureau. 

Illinois is in a similar "state" of affairs.  It, too, is close to losing a Congressional seat to some other faster growing states like Texas.  Key to the loss there, is the fact that its largest city, Chicago, is shrinking in size.  New York state is also losing people, but in its case, many of those leaving are high end earners.  Even the weather-desirable California is seeing its population growth slowing.  The fact is that 8 states have growth rates of less than 1/2 of a percent and well below the inflation rates for running the state's expenses.

We are getting very close to an actual bankruptcy of the entire State of Michigan, and not just a single city like Detroit.  Not far behind are Cleveland, Pittsburgh, St. Louis, and Youngstown, Ohio who have all seen losses greater than 50% from their peak populations.  The list of all the cities (see references) that have lost populations is substantial.  As a result, people located in those areas are bound to see higher taxes as the legislatures try to cope with increased costs and a lower tax base.  Raising taxes would only cause even more people to leave.  This is a serious spiral that America cannot afford.  The city/states that are effected need to rethink ways to restore population without raising taxes or we will all wind up paying higher taxes to bail them out.

References:

The Incredible Shrinking Illinois: http://www.chicagomag.com/city-life/February-2016/Where-Is-Illinois-Losing-Population/

Chicago area sees greatest population loss of any major U.S. city, region in 2015: http://www.chicagotribune.com/news/local/breaking/ct-chicago-population-record-loss-met-20160324-story.html

Taxpayers are fleeing New York in droves: http://nypost.com/2016/09/15/taxpayers-are-fleeing-new-york-in-droves/

The Decline of Detroit: https://en.wikipedia.org/wiki/Decline_of_Detroit

Mich. population rebound is slowing, census shows: http://www.detroitnews.com/story/news/local/michigan/2015/12/22/mich-population-rebound-slowing-census-shows/77746798/

Once a boom state, California sees a historic period of slow population growth: http://www.sacbee.com/site-services/databases/article69054977.html

Warning: New Jersey in Midst of Millennial Outmigration: http://www.njspotlight.com/stories/16/02/15/new-report-warns-that-new-jersey-is-in-midst-of-millennial-outmigration/

New Jersey Herald: Time to address population loss: http://www.njherald.com/article/20160327/ARTICLE/303279973#

List of U.S. states by population growth rate: https://en.wikipedia.org/wiki/List_of_U.S._states_by_population_growth_rate

Shrinking cities in the United States: https://en.wikipedia.org/wiki/Shrinking_cities_in_the_United_States

Sticker Shock in Illinois: Proves ObamaCare Isn't Working

With all the political news regarding the Trump/Kahn controversy, most Americans missed the news that Blue Cross Blue Shield of Illinois announced rate hikes of between 23% and 45% for their various health insurance plans in the ObamaCare exchanges.  While the Illinois Department of Insurance must still approve the rate increase requests, this merely shows, once again, that insurers are losing their shirts trying to work with ObamaCare.  And, as I pointed out previously, without an approval of these rates, insurers will simply stop selling policies in the exchanges.

Also understand, the American taxpayer is the biggest loser when a company asks for a 45% rate increase, since, in Illinois, 75% of the people who buy insurance in the exchanges will receive federal subsidies.  While this is still lower than the overall average of 86% as reported by Health and Human Services, it proves that the primary reason for buying ObamaCare insurance is that it is either free or somewhat inexpensive; and that the 33 million people who still, after 3 years of enrollments, haven't bought insurance because they can't afford to do so.

So much for the success of the so-called Affordable Care Act.

References:

Illinois' Obamacare plans seek big 2017 premium hikes: http://www.chicagotribune.com/business/ct-illinois-obamacare-rates-0802-biz-20160801-story.html

86 Percent of Health Law Enrollees Receive Subsidies, White House Says: http://www.nytimes.com/2015/03/11/us/11-7-million-americans-have-insurance-under-health-act.html?_r=0

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Deerfield and Lake County, Illinois and Obama's Fair Housing Plan

Nestled in Lake County Illinois, is the community of Deerfield. This is a perfect example of a city that President Obama's planned expansion of the Fair Housing Act (Affirmatively Furthering the Fair Housing Act or AFFH) is targeting with the integration of low income housing, so that the minority poor (primarily blacks) can enjoy the good life with a better environment and better schools. 

Deerfield, At nearly 96% white, is only three-tens of a percent black.  That's only 72 blacks out of a population of over 18,000.  The median household income is more than twice the national average at $129,187.  The average home is valued at $480,600; two-and-half times the value of an average home in the U.S..  It has a commuter station with trains that can whisk you away to downtown Chicago in as little as 38 minutes, sparing its residents an hour or more drive to get to the Windy City. But, here's the thing that really paints a bullseye on Deerfield for black activists and Obama's fair housing plans.  Deerfield has great schools.  Its high school is ranked number one in all of Lake County.  Additionally, that school also ranks in the top 500 of all high schools in the nation.

Then, there's Lake County.  It, too, is very white.  Blacks, which make up 13% of the U.S. population, are only representative of 7.4% of Lake County's residents.  Of the county's 52,000 blacks, a half are located in just two cities: Waukegan and North Chicago.  This  means that without those two cities, the actual black population is only 3.7% for the vast majority of the county.  Lake County is one of the richest counties in the U.S.; ranked 31.  It has a high number of villages and cities that are near Deerfield's affluence or higher.  All of those communities have low black populations.

So, what's going to happen to the county of Lake and cities and villages like Deerfield when they attempt to comply with Obama's view of Fair Housing.  Will the county and cities have to snap up very expensive properties in each of those affluent and white conclaves in order to build low income and high density housing for low income blacks and Hispanics, or lose all federal funding? Ask yourself this. Wouldn't the tens of millions of extra dollars being spent to achieve integration in upscale neighborhoods be better spent on the deficiencies of minority neighborhoods?  Then, there's the targeted people themselves.  How many are really going to relocate to another ghetto in a rich neighborhood that is farther from their jobs and more expensive to live in. Or, will those communities push back and tie up Obama's plans in the courts for years.  This is just another liberal attack on the wealthy.  Not to improve the lives of blacks and other minorities, but to lay siege on the rich strongholds in order to lower the standards of the wealthy; with very few blacks really being helped in the process.

Won't this do even more to destroy race relations in this country that have already  worsened under this President's watch.  Thank you Mister President!


References:

Obama: New Fair Housing rule will help further American Dream: http://www.housingwire.com/articles/34459-obama-new-fair-housing-rule-will-help-further-american-dream

The Folly Of "Fair" Housing | Hoover Institution: http://www.hoover.org/research/folly-fair-housing

Affirmatively Furthering Fair Housing: Obama's Latest Disaster: http://www.nationalreview.com/corner/421389/attention-americas-suburbs-you-have-just-been-annexed-stanley-kurtz


Obama making bid to diversify wealthy neighborhoods: http://thehill.com/regulation/244620-obamas-bid-to-diversify-wealthy-neighborhoods

Deerfield, Illinois: https://en.wikipedia.org/wiki/Deerfield,_Illinois#Education

Deerfield High School:  https://en.wikipedia.org/wiki/Deerfield_High_School_%28Illinois%29

Average Income In Deerfield: https://www.google.com/search?q=average+income+deerfield+illinois&ie=utf-8&oe=utf-8

Deerfield IL Home Prices & Home Values | Zillow: http://www.zillow.com/deerfield-il/home-values/

The Median Home Price Is $188,900: https://www.google.com/search?q=average+home+price+in+us&ie=utf-8&oe=utf-8

Lake County Quick Facts: http://quickfacts.census.gov/qfd/states/17/17097.html

Waukegan Quick Facts: http://quickfacts.census.gov/qfd/states/17/1779293.html

North Chicago, Illinois: https://en.wikipedia.org/wiki/North_Chicago,_Illinois#Demographics

Race Relations Polling: http://www.pollingreport.com/race.htm

Illinois' Blue State Blues on Unfunded Union Pension Liabilities

For decades, the mostly Democrat-controlled (blue) state governments have caved to their state union worker's demands for earlier retirement ages and increased pension amounts and benefits.  All to curry votes. Never once paying any real attention to the fact that Americans are living longer and that many rust-belt states are seeing declines in their taxable populations and increases in their poverty rates.  This is the problem facing the State of Illinois today.

Illinois has a massive unfunded pension liability problem that they may not get themselves out of until bankruptcy.  A problem so bad that the then-Governor Pat Quinn signed a 67% tax increase into law in 2011.  Then, in December 2013, that same governor signed some modest reforms that should have slowed the growth of the impending pension crisis.  But, the unions fought back; claiming that the State had a contractual obligation to pay pensions and that the amounts can never be changed. On May 8th, the Supreme Court of Illinois unanimously sided with that union argument. So, the pension crisis continues on unabated.

How big is the pension problem anyway?

The numbers are staggering, As of 2014, if you are a taxpayer and potentially on the hook to come up with the cash to pay all those retired state workers.  The unfunded pension amount, in all categories of programs, is $104 billion and growing by the day.  This is a state of nearly 13 million residents of which only half are actively working and able to pay income taxes that could help cover that huge debt.   But, if you do the math, that is a per-worker liability amount of nearly $16 thousand, and growing exponentially every year.  For, example, in 2000, the total pension liability was $15.6 billion or nearly one-seventh of what it is today.

What makes it even worse it that the Illinois' tax base is shrinking as taxpayers flee the state's already high taxes (income, real estate, sales, etc.).  I know I did. My wife and I escaped to Las Vegas for that very reason (along with the weather).  In Illinois, we were paying property taxes that were 2-1/2 times higher for a house that was 32% smaller and on a lot that was 1/3 the size of what we have now.  Also, thanks the Casinos, we pay no state  tax. The simple fact is that, based on a study of tax date in 2010, Illinois lost almost 50,000 taxpayers and their dependents in that year alone, along with almost $2 billion dollars in tax revenues.  This of course, was before the State raised its income tax by 67% in 2011; which probably only exacerbated the exodus.

There is one more problem that is putting Illinois on a path to bankruptcy.  Rising poverty.  Since the recession of 2007, the number of people in poverty has risen an average of 3.1% per year with "officially" only 2 million people or 14.1% in poverty.  But, that official rate assumes that even if you make a dollar more that the designated poverty income level per year, you're rolling in cash.  The Heartland Alliance says that 33% of Illinois residents are "at" or "near" poverty.  This is especially troubling for the pension crisis because people in poverty don't pay any taxes and people near poverty pay very little; and at the same time, sap the State treasury with welfare assistance.

Personally, I can't see how Illinois can avoid bankruptcy.  The unions won't concede on pension benefits.  The tax base is shrinking.  The workforce is shrinking while poverty is rising.  Essentially this is an all encompassing recipe for fiscal failure.  Of course, if the State is taken down by its pension shortfalls, those retired union personnel may just see much of their pension decimated.  They should have accepted the modest reforms and not taken the case to the State's Supreme Court.

References:

Definition: Blue States: https://www.google.com/search?q=blue+states+definition&ie=utf-8&oe=utf-8

Illinois Supreme Court rules landmark pension law unconstitutional: http://www.chicagotribune.com/news/local/politics/ct-illinois-pension-law-court-ruling-20150508-story.html#page=1

Census Bureau Quick Facts: Illinois: http://quickfacts.census.gov/qfd/states/17000.html

Illinois workforce smaller than at any time during the recession: http://www.rebootillinois.com/2014/08/06/editors-picks/kevin-hoffmanrebootillinois-com/illinois-workforce-numbers-since-recession/22205/

Outrageous Public Pensions Could Bankrupt These States: http://www.thefiscaltimes.com/2015/03/30/Outrageous-Public-Pensions-Could-Bankrupt-These-States

Report: Illinois poverty remains stubbornly high: http://www.washingtontimes.com/news/2014/jan/30/report-illinois-poverty-remains-stubbornly-high/?page=all

IRS data show more taxpayers fleeing Illinois: https://www.illinoispolicy.org/irs-data-show-more-taxpayers-fleeing-illinois/

Illinois' 33%: A Report on Poverty: http://www.ilpovertyreport.org/sites/default/files/uploads/Illinois_33percent_PovertyReport_FINAL.pdf


Illinois’ temporary tax hike: $18 billion later: https://www.illinoispolicy.org/policy-points/illinois-temporary-tax-hike-18-billion-later/

The victims of Illinois' failure on pensions - Chicago Tribune: http://www.chicagotribune.com/news/opinion/editorials/ct-pension-ruling-victims-edit-0510-20150508-story.html

Get Your Lab Coats: Illinois And California's Supermajority Legislatures Experiment

While much of the talk has been about the results of the presidential election, something more interesting happened on that same night in two of the most liberal states in the union.  Both, California and Illinois voted to give their state legislatures a Democratic, supermajority.  In essence, the Republicans were simply turned into stone; with nothing to say about anything.  Of course, both of these states are high on the list of the 11 most indebted in the nation; mostly because of liberal, Democratic agendas.  So it's a real head-scratcher as to why the electorate would have even considered ushering in such a large number of the very same politicians who got their states in so much trouble.

With the supermajority, neither of these legislatures have to worry about a single obstacle in preventing them from doing whatever they want to do.  In fact, both have like-minded, Democratic Governors in charge to facilitate the final passage of any of their proposed liberal legislation.  No more having to go to the public with some election day propositions to raise taxes or increase spending on education etc.  No more debates with  Republicans.   It appears a progressive Santa came early this year.

Now, it will be interesting to see what happens.  In both states, Democrats have resisted any Republican suggestions that spending cuts are needed to lower the debt.  So, with the Republicans completely sidelined, it is my guess that these two bastions of liberalism will simply see new taxes as a means to a end.  Don't be surprised that at least one of these states institutes its own, first ever, carbon tax on almost every thing that uses energy.  And, I wouldn't be equally surprised that the debt will continue to rise along with unemployment because the business environment will deteriorate rapidly.  I'll even bet that both states will come to Washington and an obliging Obama to bail them out of their massive debt problems.

Basically, I'm guessing that these two grand experiments in progressive/liberalism will result in two major fiscal disasters.

Obama Should Learn A Lesson From His Home State

Moving into 2011, the Democrats of the Illinois State legislature and a Democrat Governor rammed through a 67% across-the-board tax increase in an effort to stop the accumulating red ink in that state.  Now, nearly 2-years later, the bleeding continues and is picking up steam.  It's as if that $7 billion a year in tax increases did nothing.  You see, like our Federal government, Illinois didn't have a revenue problem.  It had, and still has, a spending problem.

What Illinois is finding out is that government spending has a life of its own unless curtailed.  Pensions are rising fast as the base of retired Illinois State workers continues to broaden.  Healthcare costs are increasing because costs are rising faster than inflation and because more people, without jobs, are applying for Medicaid.  The over 9% unemployment rate is stressing all of the state's social support programs.

Like the Illinois Democrats, Obama and the D.C. Democrats want to increase taxes to cure our deficit problems; but only for the so-called rich. They seem to think we have a revenue problem. But, letting the Bush tax cuts expire for the so-called rich will only increase revenues by, at best, $85 billion a year; while, at the same time, the federal government is overspending by more than a trillion dollars a year.  So, mathematically, there is no way that simply increasing taxes on the rich is going to solve our deficit spending problems.  If anything, the increase in taxes on the rich might actually result in less revenues because the rich will naturally take whatever measures are necessary to legally use holes in our tax codes to reduce their tax burden.  Then, too, some individuals and their businesses may actually leave the country to move to a more tax favorable country; like Canada.

Obama created most of our massive debt problem over the last four years; despite promising to cut the deficit in half in that same amount of time.   Now, we're supposed to believe that he can fix it by simply taxing the rich.  Obama has an Illinois mentality that matches that state's inability to fix its own deficit problems.  This is why we seriously need to change management at the top and in the Democrat-controlled U.S. Senate.

--- Chicago Tribune: Record tax hike isn't fixing Illinois' problems:  http://articles.chicagotribune.com/2012-05-28/news/ct-met-illinois-budget-20120528_1_pension-payments-income-tax-tax-hike