Opinion: Higher taxes, lower services ahead - Time to face reality

When it rains, it pours. On Feb. 22, Gov. Quinn in his budget address said Illinois faces serious budget issues. On March 2, Mayor Tisdahl in her state of the city address said Evanston faces a challenging economic climate.

The message from our political leaders -- higher taxes and lower services are likely to continue. Be prepared. Think about that next week when you vote.
On March 20 voters will decide two referendum issues with significant financial implications -- whether to eliminate Evanston Township and whether to spend $48 million on new school construction projects.
Presentations for eliminating Evanston Township indicate the City of Evanston can provide the same services and taxpayers could save $500,000 each year.
The D65 School Referendum will increase annual taxes $127 for a $400,000 house in Evanston.
That may not sound like much.
But if current trends of property tax bills rising at double the rate of inflation continue, the owner of that $400,000 house, who now pays a total of about $8,000 per year in real estate taxes, will have to pay $10,000 or more a year five years from now.
And why is that likely? In addition to normal cost increases, our state and local budgets are being impacted by rising pension, retiree health care, and Medicaid costs.
Most people know Illinois is in terrible financial shape. But the reported $85 billion of underfunded state pensions understates the magnitude of the problem. That's because state pension funds use unrealistically high investment assumptions.
Our largest fund, the Teachers Retirement System, currently assumes 8.5 percent for its investment return compared with other funds which assume 7.5 percent.
TRS is conducting a normal review of its assumptions and results will be released by mid-year. Stay tuned.
State woes trickle down to the local level. The state government will continue to cut funding to local communities. Organizations in Evanston are grappling with unpaid bills and reduced funding from Illinois.
Illinois is likely to shift more costs to local communities. Shifting the funding of the state portion of the Teacher's Retirement System to local communities has been suggested by Governor Quinn, Speaker Madigan, and Senate President Cullerton.
If this cost shift occurs, D65 will need to pay an additional $4.2 million per year and D202 would need to pay about $2 million per year. The actual cost for D65 and D202 will increase if the aggressive return assumptions at TRS are lowered to more realistic levels.
The City of Evanston continues to face budget challenges. During her recent address, Mayor Tisdahl said that "revenues remain under pressure and expenses are rising."
Pension issues continue to pressure the city budget, and will likely continue to pose further challenges along with rising healthcare costs.
This year the City allocated $16 million just to fund fire and police pensions, up from $8 million in 2007. Future pension contributions will increase if investment returns fall short of expectations.
Additional uncertainties in Evanston surround teacher contract negotiations at both Districts 65 and 202.
Contracts expire later this year. Recently D65 revised their projected budget deficit for fiscal 2015-2016 from $8.8 million to $2.4 million. This forecasted deficit does not include any operating expenses for a new school which could add approximately $2 million more to the deficit.
There are many challenges facing the limited resources in our state and community. Only when all the risks and hidden costs are revealed and understood can voters make informed decisions.
The current reality for Evanston residents is higher taxes and lower services for the foreseeable future. It's time to  start dealing with our fiscal constraints. Vote to eliminate the township and against the District 65 school referendum.
Jim Young was a member of the City of Evanston's 2008 Blue-Ribbon Pension Committee.

Comments

the D65 referendum - a tough vote

I'm uncomfortable about the D65 referendum.
One reason is that the upgrading of schools and the new school are lumped together. Voters cannot choose one and not the other. I suppose this was done so that all schools would have a take of the money. I feel that the new school is very much needed - that the folks who live in the neighborhood where the school would go have been stiffed for decades with their kids being bused to set things right racially at their expense.
I would like to vote for the new school and against the rest of the package.
That said, it's a shame that the pensions are what has sunk the budget ship yet one must vote on a school referendum that doesn't address pension cost.
Incidentally, there are several retired teachers in the building where I live. One of them slipped pro-referendum flyers under all of our doors. Would these teachers be willing to give back some of their pension benefits for the sake of the referendum?
Last thought - the schools take the lion's share of our property taxes. Though it is wise to stay on top of everthing the city spends our money on, the schools are the elephant in the room. Has there ever been a school referendum that has been defeated? Has there ever been a school referendum where dire consequences for the city have not been predicted if the referendum doesn't pass?

D65 referendum - not so tough really

Clif,
The D65 referendum isn't such a tough vote. The sky will not fall if it doesn't pass. Nor will it be all rainbows and unicorns if it does pass (in spite of the promises that the C4BE folks seem to be making).
There are plenty of good reasons, including the continued rise of taxes and fees in Evanston, to vote against the referendum.
Here are a few sites which provide those reasons:
http://www.d65watchdog.com/index.html
http://www.http://nod65referendum.com

Referendum truths

As we get closer to the vote, Clif, it is important to look closely at what will happen should it not pass.  To read the websites that are popping up like spring bulbs in March, there is "magic money" that will appear to build additions and science labs.  This is simply not true.  Obviously.  So, what will happen?
Most likely the district will immediately have to do two things.  The first is "change assumptions" meaning larger class sizes, the use of 'cap and transfer', art on a cart, converting art, music, teacher planning rooms to classroom space. On page 27 of this week's Roundtable, there is a section titled "B. Possible Alternatives" which you may want to look at. 
The second will be to use Debt Service Extension Funds which are currently designated (you can see the full 5 year list on the district website) for building maintenance, life safety issues and technology updates (I think this is the magic money referred to on above websites) to build classrooms additions at the most overcrowed schools - Haven, Lincolnwood and Nichols.  Will this include much needed ancillary space?  No.  STEM labs?  Absolutely not.  There just isn't enough money.  The board will need to make tough decisions about needed work like roof repairs, aspestos abatement, etc and building additions.  And no matter what a particular board member has promised - remember that there are seven of them and they must come to agreement on how that money is spent.
I suppose it is what you define as dire consequences.  For Lincolnwood and Willard kids who don't get to attend their neighborhood schools because of cap and transfer, it may seem dire to them.  For schools that will have delayed maintanence issues or those who have to start serving lunch at 10:30 because they can't all fit in the lunchroom, it's pretty inconvenient.  I guess the real question is what kind of education do we want for our kids and how much are we willing to pay for it?  Personally, I'm willing to pay the extra $230 a year.

Lorainne Morton and Hecky Powell are against referendum

When you go look on the Citizens for a Better Evanston website, you'll see that 700 people have signed up in support- Who are these people?    I don't see names.
Meanwhile.... "Former Evanston Mayor Lorraine Morton, who opposes the referendum, said she is personally hurt by implications that black parents from Foster School “didn’t know what they were doing” when they agreed to have their children disseminated to other schools as part of the desegregation plan. Morton taught at Foster before breaking color barriers in white schools and eventually becoming principal at Haven.
“They were not foolish people. They were astute people who knew exactly what they were doing, and I am proud of them,” said Morton. “They saw a bigger picture for their children and worked together with whites who wanted their children in an integrated environment.”
Morton said the coalition of whites and blacks at the time was the strongest she’s seen in her years in Evanston.
Morton does not believe District 65 needs to go to referendum to fix up the science laboratories and improve the buildings. Nor does she believe the location at Simpson Street and Ashland Avenue will provide a neighborhood school within walking distance for many of the children in the proposed option area.
“Get out your map!” Morton said, noting that some kids still will need to be bused" 
 
http://evanston.suntimes.com/news/11183223-418/ever-rising-taxes-must-stop-say-foes-of-evanston-school-bond-proposal.html
 

Where is C4BE getting all the money

Yes, who are the people who signed up to support Citizens for a Better Evanston (C4BE).
A better question is, where is C4BE getting all the money for the glitzy brochures, yard signs, the shiny buttons and now they are even making robocalls. I received a robocall today to vote for the new school referendum. It's as if they are using all the tools a politician would use to run a political campaign.
I think I know who is behind C4BE and the push for the new school. Three words:
The Democratic Party.
They want to raise taxes to create more unions jobs, which will mean more campaign donations. And Democrat politicians in November can say they created more jobs. It might sound crazy but that's what happens when there is no political competition in our city or county. 
It would be interesting to know how much money C4BE has and where it came from.

That was my question....

Anonymous Al, I was wondering that, too.  But I have a different three word answer: The Koch Brothers. They're also busily promoting public school segregation around the country, beginning with Wake County, North Carolina in 2009.

Supporters list

You can find the C4BE supporter list on the website here:  http://www.c4be.com/C4BE/our_supporters.html
The list of referendum supporters in addition to fifth ward residents who support a new school can be found in yesterday's Roundtable on page 13.  You may need a magnifying glass, though, to read it :)
 

Electricity Referendum an EASY VOTE

The Electricity Referendum gives the Citizens of Evanston an oppotunity to save money and do some good. You can take that to the Bank. If rates don't fall as a result of aggregation, nothing will happen, we will stay tied to CoMed.
However, the recent history shows savings to be in the 15%-25% range for the cost of electricity. When's the last time all you had to do was VOTE to save some money. The catch is that YOU HAVE TO ACTUALLY YES.
Oh buy the way, the doing part of the equation is that lower costs actually help that part of the community that struggles and we can have an impact on green house gases. 

Vote YES on Electricity Referendum

I must agree with you on the vote but the 15 - 25 percent savings with a high percentage of power being produced by green energy is a red herring. The one and only reason green energy has been this cheep is because of the billions of dollars in subsidies from the federal government. Without these subsidies, green energy would be substantially more expensive than traditional energy.
When the city negotiates the contract they better be careful of the traps that could hurt Evanston and its taxpayers when these subsidies go away.
 

Vote YES on Electricity Referendum

@ Skip,
I'm glad we agree on YES... but, you mentioned "power being produced by green energy is a red herring."  Everything about CCA is a good deal for ratepayers and citizens... and even better if we choose the renewable energy option.
Historically, every energy source has had its subsidies (some fossil fuels are still getting very large ones).  Renewable energy: wind & solar are relatively speaking, in their infancy in the U.S. and deserve the continued consideration (subsidies) as we transition away from fossil fuels towards more energy independance.
If the U.S. were to impose a tax on carbon... they (Renewables) might not require this subsidy.  Take a moment to consider the health benefits (no carbon, mercury, nitrous & sulferic oxides, ozone, etc.) that clean energy offers to the people breathing the air around us... Methinks that alone is good reason to subscribe to 100% renewable... and at the same time saving money - everyone wins!
Respectfully submitted, Brian G. Becharas
Brian G. Becharas
Energy Education Associates
619 Oakton St.
Evanston, IL  60202  USA
Secretary: Renewable Energy Task Force, Chairman: Transportation Task Force,
CGE - http://www.greenerevanston.org/   http://www.facebook.com/CitizensGreenerEvanston
 
 

"subsidies" a red herring

Without public subsidy of one form or another -- which includes in the broadest sense not just direct funding but R&D, land grants, rights-of-way, oil and gas depletion allowances, liability protection and caps, patent protection, monopoly exceptions, zoning breaks, etc. etc. -- we wouldn't have railroads, highways, an electric grid, nuclear power, or many other parts of our infrastructure. Singling out wind and solar and saying they alone should pay their own way isn't a sound energy plan, especially when you consider relative externalities. There's public benefit on many aspects, ranging from air quality to domestic employment rates to national security, in going green.
Also, I'd disagree that phased-out subsidies, should they occur, will necessarily increase the cost of renewable energy, if that generation is already in place. The largest costs in renewable energy are in the initial capital costs of the facilities. The marginal costs of wind once turbines are up are pretty low, which is the reason you're seeing such low prices in the power market. And as this industry continues to mature, technological innovation should continue to make turbines even more efficient.
The total cumulative impact of a shift to going green, especially if spurred by municipal aggregation, has yet to be seen, but the big picture would suggest that more expensive backup generation wll be online a lot less and/or get phased out. Leaving aside impact of a disruption in the international energy markets, domestic electricty prices should go down, not up. We'll have need for more and better transmission, but that will also create jobs.
But I agree that Evanston -- and every other city -- needs to exercise care when negotiating its contract.

Subsidize something...You get more of it.

This is taken from the "Top-10 Things Debaters Should Know about economics"
"A. People do more of something when the reward increases. When you subsidize something, you get more of it.
Examples: 
Pharmaceutical companies invest more in research and development if patents allow them to make higher profits from new drugs.
According to an old story, a small town in Italy was having a problem with vipers. So the town council established a "viper bounty" to pay people for bringing in dead vipers. The result was that people started breeding vipers in their basements. (Think about the implications of this story for gun buy-back programs.)
Americans who wanted to fight modern-day slavery in Africa founded a non-profit organization that collects money to buy children out of slavery. The result was that kidnappers started stealing even more children from their homes, because the increased demand drove up the sale price of slaves."
My point is, subsidies provide a diminishing benefit with an increasing cost.  It's best to avoid them.

Vote NO on school referendum

We don't need another school and we don't need higher taxes.  Like all organizations after a certain size, they are run for the people who run them, not for those they supposedly serve.

Pensions

Until the starte and our city begin to reign in publice pensions and healthcare, we will always face a challenging economic climate. Its time to abandon defined benefi programs and transfer current and future public employees to a 401k type plan. 

Evanston---the next Stockton California ?

Reader might want to watch the News Hour on PBS March 16 about Stockton California and the cuts they have had to make and what seems like sure bankruptcy for this town of 300,000.
Spending on everything they could think of when times were 'good' is now tearning them apart.
One of the big differences is Evanston has not had the 'good' times but been in the hole for years yet the Council and rest of government kept spending like there is no tomorrow.  I guess they figure they won't still live here when the ___ hits the fan.  Problem is many others will not either and only the very rich and very poor will be left.  With foreclosures many will face moving not by choice but by necessity---getting a good price on the home won't be a factor slowing the decision.

Evanston-the next Yonkers, NY?

Isn't there a famous saying that goes something like this, "He who fails history shall repeat?"
On the West Coast it's Stockton California and on the East Coast it's Yonkers New York and throw in Rockland County, Suffolk County and Nassau County -
To replace those cities, insert Evanston Illinois
To replace those counties, insert Cook County
What don't people see? Have you been watching the CURRENT developments in Greece?
Read this article :
http://www.nytimes.com/2012/03/11/nyregion/deficits-push-municipalities-to-desperation.html?_r=2&ref=nyregion
 

What does Greece have to do with anything

"What don't people see? Have you been watching the CURRENT developments in Greece?"
So I guess Evanston should not get into a currency union with Germany and France, and cook its financial statements, and then try to implement severe austerity measures after an economic collapse. 
Is that what you are saying?    Enquiring minds want to know.
Paul Krugman recently wrote:
"And that’s a tale that needs telling. For the past two years, the Greek story has, as one recent paper on economic policy put it, been “interpreted as a parable of the risks of fiscal profligacy.” Not a day goes by without some politician or pundit intoning, with the air of a man conveying great wisdom, that we must slash government spending right away or find ourselves turning into Greece, Greece I tell you.
.......
But what Greek experience actually shows is that while running deficits in good times can get you in trouble — which is indeed the story for Greece, although not for Spain — trying to eliminate deficits once you’re already in trouble is a recipe for depression."
See Krugman's column:   What Greece Means

Greece and Krugman

Prof. Who Knows?
Money is a scarce resource. Having a large debt, especially with 45% working for the government and their entitlements growing, is not a solution. Printing money and screwing bondholders is no solution. That printed money BTW saved the major EU bondholders and screwed the others. Nice way to encourge borrowed money again.

It grows on trees

"Money is a scarce resource"
No, Vito, it is not scarce.  The government has printing presses that can literally create money.
As for saving EU bondholders...I would say that our government is doing too much to protect bondholders.  If people were dumb enough to loan money to Greece, they knew the risks (or they should have). 
Right now,  Angela Merkel is keeping inflation too low..protecting the interests of bondholders and keeping unemployment too high.

Top 10 Reasons to Vote NO re: School Referendum

10. Vote NO to Segregation
9. D65 Administration hasn't honestly presented all costs & facts
8. Evanston Teachers think it's a bad idea(but they are silenced)
7. Concentrating children of poverty in one school is a bad idea
6. We don't need all the new classrooms
5. Evanston residents are financially stretched
4. The "New School Committee" reached its conclusion BEFORE it started
3. Survey says over 90% of 5thWard parents are happy with current school
2. D65 is currently projecting a deficit and they want to spend more $$$

And the #1 reason to vote NO:

1. Mayor Lorraine Morton and Hecky Powell think it's a bad idea

Great Sign

Forgot one; It will raise taxes on home owners, business owners, apartment building owners, and raise rents on renters. Owners will need to pass their increased expenses on to the renters.
This would make a great sign that would appear in the front of the polling places on Tuesday morning. It would probably at least offset the signs provided the the district 65 construction company.

Mayor Tisdahl has done

Mayor Tisdahl has done everything she and the council can do to make Evanston's budget a challenging economic climate:  3-1-1 with never-mentioned unanswered calls or months for an answer, economic development gifts to selected businesses, adding commercial space in new construction to create more empty storefronts or take revenue from existing businesses that are trying to stay alive.  And we taxpayers end up footing the bill while council members appear for photographs.

Green Energy will be better when it is ready for prime-time.

Vote YES for the electric referendum.
Green energy is great and will probably be available at a reasonable price in 10 - 20 years. It doesn't mean we should stop investing in research but I believe that our government stop fund for-profit ventures with billions of tax dollars.
Solar power may be fine in states like Arizona, New Mexico, Southern California, and Nevada but is not a smart choice for Illinois and most other states unless you have money to burn.
Wind power is unreliable and not remotely close to being profitable without a huge influx of tax dollars. In addition, people who live near the hundreds of wind mills along I55 had to sound proof their houses to lessen the noise pollution at night. Going out in the day is still a big ear-full for them.
I believe the wind mills generally face southwest. Perhaps they can be successful when the Illinois politicians are in session in Springfield.
The Volt, now there is a great car that gets about 20 miles in the winter for a 13 hour charge that costs more than the gas that it didn't use.
I believe that green power is great and good but it is not ready for prime time. I think our government should keep funding the research but funding the Solnydras is a waste of taxpayer money. When green power is ready, private industry will invest in it without the government's help.
When the electric referendum passes, it is the duty of the city council to pick the best company for the taxpayers which would be the one that is the most reliable, with the most cost savings, and the one that protects us against any mass increases in the duration of the contract. If they pick a company that is their personal favorite or the favorite of a special interest group, they will have failed in their duty as an elected official.
They are there for all the people, not a special few.
 

Analysis of energy alternatives

A recent book "Powering the Future" Robert Laughlin [physics prof. Stanford and Nobel winner] discusses the time frames, costs [all in], benefits for enviornment [and costs of each] of current and proposed energy sources.
Very interesting book and discouraging !
EPL Main has it.

New school

Do those who are pushing so hard for the new school pay the taxes needed to support it?