High sales taxes, low job opportunities send Illinois to bottom of list for military retirees

News-DemocratJune 1, 2014 

James Harper (USAF Colonel, retired) with his daughter Jennifer Harper, who has Down Syndrome. They were volunteering their time on Friday at the Dunkin' Donuts in Fairview Heights, where Fairview Heights police officers were promoting the Law Enforcement Torch Run, which raises money for Special Olympics. People who made a donation got coupons, t-shirts, or coffee mugs, depending on the level of their contribution.

TIM VIZER — tvizer@bnd.com Buy Photo

James Harper, 60, retired as an Air Force colonel in 2006, choosing to live in O'Fallon.

Harper does not regret his decision to retire in the metro-east, he said.

"We're doing fine here," said Harper, who spent his career in military security. "It's a good place to live."

Harper chose O'Fallon because its school system could provide for the needs of his daughter Jennifer, 21, who has Down syndrome, and because of the community support.

"There are a lot of volunteer activities and things," said Harper on Friday, when he was photographed with his daughter during a fundraising event at the Dunkin Donuts at 6008 N. Illinois St.

But Harper acknowledged that things could be better, including Illinois' high sales taxes and challenges with job-hunting.

"You just got to find a job," said Harper, who was laid off from a consulting job in 2012. "There are some jobs around. It depends on what you're looking for."

High sales taxes, poor job creation -- in addition to difficulty accessing VA medical facilities and extreme ranges in weather -- have landed Illinois near the bottom of a list of the best states for military retirees.

Illinois ranked No. 47 out of the 50 states, plus the District of Columbia, in its desirability as a place for career military to retire to, according to a recent list compiled by WalletHub, a personal finance website.

In contrast, Wyoming ranked as the No. 1 place for military retirees, according to WalletHub, which cited the Cowboy State's strong economic environment (No. 4), quality of life (No. 3) and access to health care (No. 5).

California came in dead last -- No. 51 -- because of its poor economic climate (No. 51), less-than-average quality of life (No. 34) and middling access to health care (No. 25).

Wyoming also received high marks because it is one 9 states with no income tax. Three of the other states in WalletHub's top 10 for military retirees -- Alaska, New Hampshire and North Dakota -- also lack a state income tax, while also featuring other taxes that are lower than average.

Illinois' high sales taxes -- at 6.25 percent, in addition to the taxes that cities, counties and other Illinois taxing bodies tack on -- were a major factor in the state's low WalletHub ranking.

But other major factors were quality of life issues such as the number of military veterans per capita (No. 45), said Odysseas Papdimitriou, WalletHub's chief executive officer.

"Veterans like to be around other veterans," Papdimitriou said.

What's more, Illinois finished at No. 50 for quality of life for military retirees because of the relative scarcity of veterans benefits facilities (No. 42), the number of homeless veterans (No. 26) and number of days of sunshine and level of humidity (No. 36), Papdimitriou said.

Illinois also finished No. 34 in economic environment because of high taxes and the paucity of veteran-owned businesses (No. 51).

The shortage of veteran-owned businesses is a reflection of a gap in educational opportunities to allow retirees to convert skills honed during military careers into good civilian jobs, he said.

"How can you identify opportunities where they can use that great skill set?" Papdimitriou said.

That's a question that Mike Taylor would like to answer.

Taylor, 43, retired from the Air Force in 2011 as a technical sergeant after a career as a military plumber and wastewater technician at Scott Air Force Base.

Since his retirement, Taylor, of Highland, has not been able to find a full-time plumbing job. Instead he's had to make do with temp jobs.

Taylor blamed the state's labor unions for his problems finding a full-time job.

"They make it hard to join," said Taylor, who is originally from Texas, but chose to stay in Illinois because of a divorce he is going through.

Overall, did Taylor think Illinois is a good place for military retirees?

"Generally yes," he said. "Jobwise, no."

Ellen Krohne, executive director of Leadership Council Southwestern Illinois, which has the task of protecting Scott Air Force Base from budget cuts, cited the large number of military retirees in the metro-east as proof this part of Illinois is friendly to military retirees.

"If you look at our population, there are very many people who come to Scott and stay," Krohne said. "That's one of our biggest sources of growth in population around southwestern Illinois. People come to Scott and stay because they like it. So I think that southwestern Illinois might a be a little different than the state of Illinois as far military friendliness."

Krohne agreed that taxes are major factor in surveys like the one conducted by WalletHub.

"I would suggest when people look to locate a family that it's one factor," she said. "But there are lots of other factors, right?"

One of the metro-east's biggest strengths when it comes to retaining military retirees is the support the community has for them, Krohne said.

"I think our military looks at how receptive is the community to me and veterans, 'how much support will I get here?'" she said. "And with Scott Air Force Base here, and the VA hospital, and the services they can get here, I think they know they'll get a lot of support."

Illinois would've ranked even lower in the WalletHub survey if it weren't for the fact that, like 12 other states, Illinois does not tax incomes from military pensions.

"Which is a huge bonus," said Ben VanMetre, a budget analyst for the Illinois Policy Institute, a free-market think tank in Chicago.

"Unfortunately, all the negative components of Illinois' economy really outweigh the one bonus we do have going for us," VanMetre said.

Illinois' high sales taxes stem from the fact the General Assembly exempts major categories of goods from taxation, as well as services, such as those provided by lawyers and barbers, resulting in a narrow sales tax base.

What also hurts military retirees in Illinois is the state's high property taxes -- the second-highest nationally -- which stem from the state's 7,000 units of local government, including townships, one-building school districts and water and fire districts. As a result, Illinois has more local units of government than any other state in the nation, VanMetre said.

"If your retirement income is your only source of income, and you own a home, then property taxes are just killing the money that you are receiving from your retirement check," he said.

Illinois is both a high-taxation and high-spending state, a status fed in large part by its generous pension system. The general assembly's borrowing against that system has, in turn, led to the state's huge debt crisis. It in turn leads to higher fees and taxes that penalized retirees.

"We've gotten into a situation where the politicians can't control their spending, so they're going after every tax they can," VanMetre said.

VanMetre said he wasn't at all surprised by Illinois' low ranking on the WalletHub survey.

"It's unfortunate that Illinois doesn't present the opportunities that people in the military deserve when they come back here," he said.

Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 618-239-2533.

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