Monday, March 26, 2007

Cook County Deficit - Is Tax Secession Coming?

Cook County is one of the largest counties in the United States. Cook County stretches all the way up to the northern suburbs (some of the richest in the country) far down to the south suburbs and all the way west to O'Hare. Virtually all of the City of Chicago is within Cook County, over 5 million people.

In a prior job I worked with Cook County in a financial capacity. I won't go into that in this post but the areas that I came in contact with were some of the most poorly run functions that I have seen in any business or governmental entity, anywhere.

Cook County is currently undergoing a financial crisis. The County is being forced to consider staff cuts and cuts to operations, including local clinics. The billboard above was bought by the local nurses' union to protest firings of nurses and proposed health care clinic closings.

The billboard jumps right to the point - eliminate patronage hiring, not people on the front line like nurses. Of course, this is never going to happen; the essential reason for county government to exist is almost solely to find jobs and easy government contracts for cronies of the county. Services and quality aren't on the priority list, anywhere.

The immense drain on county services is HEALTH CARE. Cook County operates a large health care system that serves the indigent within Cook County, the vast majority of which are within the City of Chicago (some of the suburbs, particularly in the south, are very poor, but their numbers of poor people are dwarfed by the inner city of Chicago. Plus, many of those poor people can't get to the facilities located within the city).

Per the 2005 Cook County financial statements (which I will take apart in detail sometime when I have time to post) which you can download here - on page 13 they describe the health care facilities provided by Cook County, which include three major hospitals and a large health care bureaucracy. Per the financials:

"Program revenues... are not keeping pace with the accelerating costs of health care operations thus resulting in a $374 million loss from operations in 2005". The county hospital system has expenses of ~$1 billion and revenues of $650M. Note that this does not fully include the costs of capital construction.

If you look at other counties, such as Dupage county, for example, where you can find their 2004 report, their health care budget is approximately $44M and they don't own any hospitals. Their revenues come close to covering their overall costs. Dupage county is significantly smaller than Cook County and this is seen in that their health budget is only a fraction of Cook's - but the most important number is that health care isn't nearly a net drain on the county compared to Cook County's financials.

The only reason that Cook County is able to afford this massive health care system for the poor is that Cook County is so physically large that it holds a huge swath of affluent neighborhoods and suburbs that are essentially taxed for services they'd NEVER use (no one intentionally enters a public health care facility in Cook County unless there are no other options) which allows them to subsidize this service to the poor.

These nurses are complaining but the real issue is how long Cook County can afford to provide this vast, money losing health care network. Taxes continually go up in Cook County for services that the residents who pay taxes will never use.

I am surprised that there haven't been more instances of suburbs threatening to break away from Cook County - in Atlanta, Fulton County, which has a lot of similarities to Cook County, is starting to have a serious push to split the suburbs off from the city to create their own county. Here is an article describing the proposed split in Atlanta:

"The plan's chief sponsor, Representative Jan Jones of Alpharetta, says Fulton County is too large and dysfunctional to be considered truly a local government... Milton County would have a population of about 300,000, instantly making it Georgia's fifth-largest county. Those residents represent 29 percent of the county's population of 915,000 but pay 42 percent of its property taxes, according to a local taxpayers group. A split would lead to the loss of $193 million in property taxes alone for Fulton County."

Sadly enough, Fulton County in Georgia probably is a model of good government compared to Cook County. I could link to literally thousands of posts regarding corruption, losses, filth, bad government, patronage, etc...

The real question is, why do the suburbs and affluent residents, who receive almost nothing of value for their tax dollars, put up with it? When will Cook County suburbs and upscale areas try to do to Cook County what they are doing in Atlanta?

The nurses will never get the patronage issue fixed, but taxpayers probably will swallow another big tax increase to keep the dysfunctional and corrupt system "running" for another year. And perhaps we are just moving that much closer to a tax revolution or secession...


CZ said...

Great post Carl. I am a former resident of Crook County. Lived there for twenty years.

The corrupt union controlled government has ruined Illinois and they're not through with it. You get what you vote for.

My solution? Moved to Indiana. Crossed the state line and held my nose as I passed through Lake County (which is a mini Crook County).

When I settled in Porter County I found affordable housing, wooded hillsides, friendly people and a concealed carry permit.

We welcome many refugees from the People's Republic of Illinois daily.

Ryan said...

Your problem will be the refugees will flee the high tax, high regulation Illinois, settle in Indiana and then say "Why, we need to vote people into office who will enact all these great programs."

Happens every time. I've already started seeing the change in Porter County the last time I was home, it was already becoming less friendly.

Snohomish County, WA is experiencing that problem as people flee Seattle in droves.

Jonathan said...

Yeah, the refugees always screw up the places they move to. But they end up better off, and they bring new capital, businesses, ideas and demand for goods and services to those places, so the situation is hardly all-bad.

Chicago is still a pretty good place to do business, but that's mainly because the mayor and a few of his allies realize that they have to block the worst ideas coming from the numerous destructive idiots in their own machine. The City is, unless it's lucky, essentially one mayoral retirement away from being in much worse shape. And while Daley can prevent the idiots from chasing away WalMart, he can't do anything about the demographics of the tax base without repudiating everything he's ever done. I agree with Carl that, eventually, something may give and change the local political climate in a fundamental way.

Nice place to visit once in a while but I'm glad I left.

Oh yeah, I don't remember if I shared this photo here before.

Dan from Madison said...

I remember that photo - love it.

As for secession, I wonder how hard it would be legally for a place like say, Oak Park or Downers Grove to actually do it.

Eventually there must be some sort of end to it all. My taxes here in Wisco are sky high, but at least I get a decent level of services in exchange whereas others, such as in Chicago for example are getting essentially nothing, except the cops keeping potential riots at bay.

Anonymous said...

Your problem will be the refugees will flee the high tax, high regulation Illinois, settle in Indiana and then say "Why, we need to vote people into office who will enact all these great programs."

Happens at all levels. Think of the illegal immigrants who cross over and then rally for the policies that screwed up their own country.

Carl from Chicago said...

I agree with your points but I think that there is a difference between people that go to a county and demand a different level of services (i.e. move to Indiana) from a large number of people who live in a county that receive ZERO value for their tax dollars. Cook County is very big in terms of square miles and thus they are able to tax the far suburbs and use this money to fund their own problems concentrated in the poor parts of the city of Chicago. It seems to be a relatively unique situation at the county level, at least. Other states like Michigan leave Detroit to die with no tax base rather than to allow Detroit to tap into affluent neighbors to prop up their institutions.

ken said...

I have lived here all my life (49 yrs) and I am sick of being taxed to death. Cigarettes, gas, water, property, food, theater, restaurants, etc. Crook county is the highest taxed in the midwest. The reason: the three stooges, Blagoavich, Daley and Stroeger..........all crooks.

ken said...

Oh and of course all the illegal mexicans we have here in chicago. There are and have always been laws just enforce them. The problem is they have gotten so out of hand they can't control the situation.