State and local governments have racked up trillions of dollars in unfunded retirement benefits to public-sector workers. Without some kind of reform, increased taxes and reduced spending on other programs will hinder business and residential recruitment. Illinois-based heavy equipment manufacturer Caterpillar declined to locate a new factory in the state because of concern about Illinois' "business climate and overall fiscal health." California's unfunded pension bills now top $500 billion, according to studies by Stanford University's Joe Nation. Homeowners in Chicago paying $3,000 in annual property taxes could see their tax bill rise as much as $1,400 in five years. Former Chicago Mayor Richard Daley warned residents in December that tax increases could be so high, "you won't be able to sell your house."
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