Experiences with financially struggling government?

[unclemick]

Hmm - no govt. pension but lived in Seattle and suburbs, Denver, outside Baltimore, Long Island near Bethpage, Huntsville Alabama, New Orleans in town and 'da swamp' aka Lake Ponchartrain, St Joe MO and Kansas City.

Don't tell anyone - Kansas City is the best.

Heh heh heh - Of course marrying a hot young 67 yr old widow at age 70 'may' be altering my judgement. . The jury is still out for 'da Farm' up north near the Iowa line.

 

[Red Badger]

The good. The bad. The ugly.

Illinois has a clause in the state constitution that prohibits cutting state pensions (sucks to be a tax paying non-pensioned citizen of that state.).

There is no US constitutional provision for states to enter in to bankruptcy (cities - yes).

CA and several NE states are likely next.

 

[Music Lover]

Illinois is definitely in trouble. Unlike a municipality, there appears to be no path for a state to declare bankruptcy! I had high hopes for Gov. Rauner to do something to fix our mess, but he has been a non-starter IMO. Maybe, or maybe not due to his own doing. However, as long as Illinois doesn't tax retirement income, we will be staying put. We have family here and want that social/familial connection. But if they start taxing IRA and 401K withdrawals at anything near current (or higher) income tax rates, we be gone! I'm not sure where to, but we won't be staying in this state if we can help it.

So, you want them to fix the mess, but if they fix it by having you pay tax at the same rate as non-retirees, then you're out of there?

That's part of the problem...people always want the government to fix things, but only with other people's money.

 

[Lsbcal]

I don't follow the pension funding news much. It's not a pretty picture in many state and local areas.

This report by Pew has a table that shows the funded ratio by state. Some standouts low numbers for 2015 were:

Kentucky 38%
Illinois 40%
Connecticut 49%

Our state California came in at 74%.

 

[Just_Steve]

Not all of them. I retired from a county job and the pension is well over 90% funded. Someone else here posted that their state government pension was fully funded. But that makes for a boring news story so you never hear about those.

Come on now Walt, don't shatter that mans ignorance with fact.

 

[Just_Steve]

I grew up in NYC during the 70's when the city was on the verge of bankruptcy when they asked the feds for some money and President Ford told the city to "drop dead". The whole city was a dump, the subways and buses were barley functioning, the police were at staggeringly low manpower levels, crime was rampant.
So how did NYC avoid bankruptcy you may ask? The public pension plans loaned them millions to stay solvent(billions in todays dollars).

 

[Blue Collar Guy]

If anyone saw the news yesterday Illinois is about to be kicked out of the mega millions/powerball lottery due to a lack of payments and a budget for the last 2 years. This is on top of bond rating agencies threatening to take the state to junk level investing in July as well should nothing come of the state representatives. This got me thinking, does anyone have experience living in or near a government entity that is struggling financially?

Were there any notable changes to how things were run over time, increases in taxes, loss of services, changes in property/income/sales taxes and shifts in demographics in the near to medium turn that were quickly noticeable?

As a hip, avocado toast eating , suburban living, late 20's, married and renting millennial who resides in the land of Illinois this had me wondering how things could turn out for Illinois residences. Obviously Detroit had it extremely rough prior to bankruptcy but for other towns/cities what has happened? And do the financial hardships really hit everyone, or if you live in an area that tends to be fairly wealthy and without much government assistance do things change much at all for you?

Im sure things have evolved a bit since then, but NYC was next to broke in the 70's. They laid off 5,000 cops. They didnt hire anyone for any agencies from 1975-1979. Talk about attrition. The city went into a steep decline, the subways were frightening. It was the picture of urban blight. Even precious Manhattan, took on a look of the land of the lost. It took forever to turn around some areas. I know for a fact, when the famous 1977 blackout occurred everything above 96th street was not policed. They just protected the midtown area. If your brave, and have a long time line, buy property when the place goes bust.

 

[pj.mask]

I've lived and worked in the urban South. I've lived in suburban Detroit and worked in Detroit. I now live and work in Chicago and visit Detroit and southern cities on business. You are right about the cost of living differences as among these locations, of course. I think that you're also right about local government quality differences, although that's partly a matter of opinion (which is why political parties exist and why local elections occur).

But "cost of living" and "standard of living" are very different concepts. A low cost of living does not imply a high standard of living. Everything else being equal, it implies exactly the opposite.

That said, if being in nature were of overwhelming importance to a person, and if city amenities were unimportant (or negative), then in that case low COL would imply a high quality of life for that person. But I still wouldn't call it a high standard of living. I would say that it is "simple living," which some favor and others don't.

Low-tax, low-resource governments do facilitate LBYM, which (as you note) enabled you to FIRE. Congratulations for that, assuredly.

I don't entirely see it the same way. Houston has a relative low COL. A new 2200 sq ft townhome can be had for 300's in the downtown area. Houston has among the best food and shopping of anywhere I have been. Plenty of events and park.

You could move to the suburbs and get houses around 200k in good school districts with events and culture (and 30 min drive to downtown).

If you compare California, NOLA, or the north east - Houston is comparable for things to do and cheaper on cost. Sure there are variations but the point being you can usually move somewhere much more economical without giving up a lot.

 

[Fedup]

My kid just came back from a wedding in a Texas. She said there was a lot of mosquitoes there.

 

[Texas Proud]

The good. The bad. The ugly.

Illinois has a clause in the state constitution that prohibits cutting state pensions (sucks to be a tax paying non-pensioned citizen of that state.).

There is no US constitutional provision for states to enter in to bankruptcy (cities - yes).

CA and several NE states are likely next.

The thing is that the constitution can be changed....

From what I read the Illinois pensions are too high and mandatory increases are also... not something that is good value for the taxpayers...

HOWEVER, I have also read that they have vastly underfunded the pension for decades which is also wrong...

I think a good middle ground should be worked out, but neither side is going to be willing to compromise... and the people due the pensions right now have the upper hand.... but when checks stop going out they will be yelling for a federal bailout

 

[REWahoo]

My kid just came back from a wedding in a Texas. She said there was a lot of mosquitoes.

Mosquitoes show up at all Texas weddings - even though they rarely RSVP. Can't resist the free food.

 

[Marita40]

I grew up in a Chicago burb and couldn't wait to leave. Love my adopted state of MN. Chicago is less than an hour plane ride away and fun to visit on occasion.

 

[W2R]

If you compare California, NOLA, or the north east - Houston is comparable for things to do and cheaper on cost.

I thought that was interesting, so I Googled for one of those cost-of-living comparison calculators.

This one says that living in New Orleans only costs 96% of what it costs to live in Houston. It gives a breakdown by category.

As for things to do, well, we don't have the same types of things so it's hard to compare. I think Houston has more exhibits and events of substantial cultural significance than we have. We have more "sin and degradation" type activities oriented towards the tourists. But there are other things to do here, too.

I have never lived in Houston, but lived in College Station for 12-13 years so I saw a lot of Houston during that time. I think Houston looks like a great place to live, other than the traffic there.

 

[2017ish]

... I think Houston looks like a great place to live, other than the traffic there.

Middle son and his wife met in college/houston and stayed there for a year before grad school. They thought the traffic was horrible, although otherwise liked the area. Now that they live and work in the Northeastern megalopolis, however, they look with longing toward Texas!

 

[CRLLS]

So, you want them to fix the mess, but if they fix it by having you pay tax at the same rate as non-retirees, then you're out of there?

That's part of the problem...people always want the government to fix things, but only with other people's money.

The government got us in this mess. Only they can get us out. If I really got what I wanted, it would be a State balanced budget. We just cut 0.5% from the general income tax. Not sure why they did that. I think (not exactly sure) that the temporary tax increase window ran out and our legislators couldn't agree on anything. I'd settle for a realistic budget. The problem is the state promised what they couldn't deliver. Now everyone knows that they can't deliver but nobody will cut services or increase income to make it work. What's done is done. Can't change that. But we can't continue digging ourselves deeper in debt.

And yeah, I really don't want to pay income taxes on my retirement income. I look at it as another situation of they promised me this and now their taking it away. Nobody "likes" that. I don't know why this one promise should be broken so they don't break the other ones. It is comparable to the feds deciding that Roth IRA's will now be taxed as regular income. Notice I said "But if they start taxing IRA and 401K withdrawals at anything near current (or higher) income tax rates, we be gone!" So far, I have been paying taxes as a worker and not started collecting SS, IRA or 401K monies. And I haven't left yet.

If they raised everyone's income taxes by 0.5, where retirees would pay 0.5% and workers would pay an additional 0.5% or some such thing, that might be tolerable. There would have to be some sort of budget to go along with that increase IMO. Think along these lines:

Kid: " Hey dad. Will you give me a bunch of money?"
Parents: "What would you do with it?".
Kid: "I'd spend it on something. I'm not sure what!"

I know the outcome if I was asking my parents or my kids asked me. It should be no different for the state asking for money from its taxpayers. IMO.

 

[Bamaman]

I graduated college in Memphis and stayed 18 years before leaving. It was like I was a bird let out of a cage. You know, you can die walking the streets of that town.

You can even more easily die in Chicago, as it's about as dangerous of a city as there is. I saw a map of where the murders happen and it's not all southside. It's west of downtown and scattered everywhere--except the far western suburbs.

I used to work for a Chicago company, and have always noted housing is twice the cost of housing in major southern cities. And property taxes and state income taxes are outrageous. My friend had a 2800 square foot normal house in Napierville, and property taxes were $10K per year.

But if you think taxes are high there, you ought to see what they are in Wisconsin. A co-worker lived in a 1100 square foot 30's craftsman house on a 45' lot in Kenosha, and the property taxes were $5500 per year. At least Wisconsin has faced their fiscal woes somewhat, but it's another unaffordable place to live. Workers there live in ILL.

 

[JoeWras]

Illinois has a clause in the state constitution that prohibits cutting state pensions (sucks to be a tax paying non-pensioned citizen of that state.).

Blame me, or at least my now deceased mother.

She was one of the (many) citizen participants in the 1970 convention. Not a delegate, but part of the greater citizenry who reviewed it and met with the delegates. I remember having a lot of draft constitutions we used as scrap paper.

I think the key is it was 1970. This was halcyon days of pensions. It had to part of the thinking. Of course, times change.

 

[socca]

I lived in a cute 1930s Craftsman house (900 sq ft & one BA!!) in the 1990s in suburban Cook county. The property taxes were reasonable back then.

My primary beef with IL these days is slow payment of income tax refunds compared to (for example) ND. Of course, this is a minor problem compared to the potential reduction or loss of a pension.

 

[Texas Proud]

Of course they cannot cut the budget... it is not in the DNA of a politician...


Look at the federal gvmt with the sequester... Congress critters were pulling out their hair just to 'cut' $20 or so billion out of the budget of over $1 trillion... and this was not a real cut but a reduction in the increase...

Every dollar spent has someone behind it that wants to keep it going and will not let it go... you just have the same problem at the state level....

 

[Koolau]

IL has kicked the can down the road for so long that they are now up against a wall. I'm sure they'll continue to kick, even though the can bounces back in their faces. If I lived in IL I would be moving out pronto. Detroit was somewhat manageable because of its relatively smaller size. I fear that only the Feds can save IL - which means we all pay for their mistakes. Naturally, YMMV.

 

[JoeWras]

IL has kicked the can down the road for so long that they are now up against a wall. I'm sure they'll continue to kick, even though the can bounces back in their faces. If I lived in IL I would be moving out pronto. Detroit was somewhat manageable because of its relatively smaller size. I fear that only the Feds can save IL - which means we all pay for their mistakes. Naturally, YMMV.

Which will ramp up the national "discussion" to an even higher level.

 

[1-31-18]

I grew up in a Chicago burb and couldn't wait to leave. Love my adopted state of MN. Chicago is less than an hour plane ride away and fun to visit on occasion.

Comparing Chicago to "a Chicago burb" is like comparing Chicago to Houston, as another poster did. In each case they have little in common.

 

[1-31-18]

I don't entirely see it the same way. Houston has a relative low COL. A new 2200 sq ft townhome can be had for 300's in the downtown area. Houston has among the best food and shopping of anywhere I have been. Plenty of events and park.

You could move to the suburbs and get houses around 200k in good school districts with events and culture (and 30 min drive to downtown).

If you compare California, NOLA, or the north east - Houston is comparable for things to do and cheaper on cost. Sure there are variations but the point being you can usually move somewhere much more economical without giving up a lot.

Where in the world can I get 22 miles of public access waterfront, complete with bike paths, tennis courts, golf course, bird sanctuaries, arboretum, aquarium, natural history museum, local history museum, world-class art museum, beaches with restaurants and bars ... across the street from my city home and within walking distance of world-class restaurants and retail?

Answer: not Houston, indeed not anywhere. Daniel Burnham, who planned all of this, would have been run out of town in Houston, which infamously has no zoning. Chicago is classified by demographers as a global alpha city and I've just itemized a few reasons why. There are hundreds of other places to live with attractive amenities, but none with this constellation of attractions immediately accessible to the public.

As with other high-priced locations, those who can't afford it on an after-tax basis, or who simply don't value the amenities of a global alpha city, are wise to live elsewhere.

 

[ERD50]

...
You can even more easily die in Chicago, as it's about as dangerous of a city as there is. I saw a map of where the murders happen and it's not all south-side. It's west of downtown and scattered everywhere--except the far western suburbs. ...

That's not true. The violence is much more prevalent in certain neighborhoods, some of those are west of downtown (and people who want to stay safe know that and don't go there). Garfield Park, Englewood, Austin, Lawndale... The Loop, South Loop, Near North, and North & NW areas are far safer areas.

You don't hear people talk about murders in St. Louis, Baltimore, Kansas City, Cincinnati, Cleveland, Atlanta, Philadelphia, Memphis, Buffalo, D.C, Stockton, Miami, Milwaukee, Pittsburgh, do you? And they all have higher murder rates than Chicago (data from years 2010-2015)! And Indianapolis (yes, Indianapolis!) is right behind Chicago.

Since much of that is concentrated in those specific neighborhoods, it stands to reason that Chicago must be much safer than those other cities if you stay in the better places (assuming those other cities aren't as concentrated as Chicago, not sure about that).

I sure wish they could clean up the violence in those places, it must be terrible to live there.

-ERD50

 

[haha]

We won't be moving to a warmer climate, I hate heat/humidity. Florida is not a dream for me, but a nightmare ( except in February)! To each their own.

-ERD50

If coastal California is too expensive, hard to beat Colorado, or Arizona Hi-Country like Flagstaff. Reno is splendid also, and good access to San Francisco too.

A couple guys in my condo building live late fall and winter in Las Vegas, then come back here for the late spring/summer. If I felt comfortable financially to do this, it might be a very nice way to live. I'd have to take GF, or I might some back to find some other dude parking in her drive.

Ha