Have you walked down State Street or the Magnificent Mile lately? Once thriving corridors of economic activity, they now have many vacant storefronts. Does this reflect a city in decline, anti-business policies or failure of visionary leadership?
The Magnificent Mile saw a 51% drop in active business licenses from 2015 to 2024, the Illinois Policy Institute found. The overall number of businesses operating in Chicago dropped 17% during the same period, and this year, issuance of business licenses have declined almost every month. The loss of businesses has a negative impact on the city budget, families and public safety. It represents lost paychecks and stability. Declining revenues for the city will add to the tax burden of homeowners, residents and other businesses.
According to a WalletHub study this year on the best- and worst-run cities in America, Chicago ranked No. 144 out of 148. WalletHub compared the most populated cities across the key categories of financial stability, education, health, safety, economy, infrastructure and pollution. Chicago ranked No. 116 on the economy, with an unemployment rate higher than the national average driving the poor standing.
“The best-run cities in America use their budgets most effectively to provide high-quality financial security, education, health, safety and transportation to their residents. Many of the top cities also have a very low amount of outstanding government debt per capita, which can prevent financial troubles in the future,” noted Chip Lupo, a WalletHub analyst.
Sixty percent of Chicagoans believe the city is moving in the wrong direction, as revealed by a poll of 1,230 Chicago adults conducted in November and December, by NORC at the University of Chicago. Mayor Brandon Johnson and city leaders should collaborate on a budget that addresses the city’s long-term fiscal health.
A wise person said: “If you find yourself in a hole, the first thing to do is stop digging.” There are common-sense ways to grow revenue without raising taxes.
Elected leaders could use entrepreneurship to balance the budget. They should cut red tape, taxes and high licensing costs and provide capital to help small businesses grow. There are states that are thriving because they are lowering taxes, ensuring public safety, effectively educating children and growing their population.
In Florida, the state does not levy a personal income tax. The legislature just passed legislation to place a constitutional amendment on the November ballot that, if passed, would phase in massive increases in the homestead exemption for primary residences. The ultimate goal is elimination of non-school property taxes over time.
Florida is considered one of the most business-friendly states in the U.S. The state corporate tax rate is just 5.5%. Compare that with Illinois’ corporate tax rate of 9.5%. Indiana has a corporate tax rate of 4.9%. Florida leaders are providing real relief for homeowners and residents using tax cuts.
Chicago’s high corporate tax rate and failure to address public safety concerns are causing businesses such as Walgreens to close stores in struggling neighborhoods. Walgreens has cited rampant retail theft, severe financial losses and persistent safety concerns for employees and customers as reasons for closing stores in Chicago. At the Chatham location, Walgreens says inventory loss from shoplifting reached $1 million, representing 16% of the store’s total inventory. The theft has caused stores to lock product in boxes and hire security personnel. Walgreens is actually closing around 1,200 unprofitable stores nationwide. I’m a senior citizen, and the impact of the closings on our seniors and members of other vulnerable populations who rely on Walgreens for healthcare is concerning.
Tennessee has one of the best-funded public pension plans. It has a 104% funded ratio. By contrast, Illinois has one of the lowest funded ratios, at 52%. In the city of Chicago, police and fire have the lowest funded ratio at 24.5%. Policymakers in Tennessee mandate full payment of actuarially determined contributions every year, manage conservative and diversified investments internally, and use hybrid retirement models to control costs.
Unlike Illinois and Chicago, where leaders after decades of underfunding use gimmicks to balance the budget.
The Obama Presidential Center, set to open later this week, will likely provide an economic boost for the city and state. If Chicago loses the Bears to northwest Indiana, it will cause hundreds of millions of dollars to be lost in hospitality, tourism and jobs.
The following are some suggestions to make Chicago one of the best-run cities:
• Johnson should cut corporate taxes, fees and permits.
• Johnson and the Illinois General Assembly should address pension debt through constitutional pension reforms — adjusting overly generous and unsustainable pension payments.
• City leaders should make investments in law enforcement, technology and jobs to ensure all neighborhoods are safe.
• Elected leaders should be honest with the citizens regarding the pension crisis.
• Aldermen should not support a budget that relies on borrowing, raiding tax increment financing funds and other gimmicks to pay for recurring operating costs.
• City and state leaders should incentivize federally qualified community health centers to co-locate in neighborhoods considered pharmacy deserts.
• City and state leaders should reinvent procurement offices to function as a financial tool.
The Bible declares in the Book of Proverbs: “Where there is no vision, the people perish.” The fates of Illinois and Chicago are economically and politically interconnected. We rise together.
I write this commentary to make those comfortable with promoting anti-business policies and tax increases uncomfortable.
Willie Wilson is a business owner, philanthropist and former mayoral candidate.
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