Decatur is Illinois’ fastest-shrinking city since 2010

Decatur lost 3,400 residents from 2010 to 2016, or about 4.5 percent of its population.

Nestled in central Illinois, Decatur is the largest city in Macon County and accounts for more than two-thirds of its population.

And being right in the middle of the state, Decatur is an intersection of the various parts of Illinois’ economy. Residents work in manufacturing, health care, energy, agricultural processing, education and a variety of other fields.

But residents are leaving. And the city is shrinking as a result.

Numbers from the U.S. Census Bureau show Decatur’s population declined by 3,400 residents from 2010 to 2016, or 4.5 percent. Among Illinois cities with populations over 50,000, Decatur’s losses were the worst in the state on a percentage basis.

So why is Decatur’s population declining?

One possible cause is the city’s sluggish job market. The Decatur metro area gained only 100 jobs from August 2016 to August 2017, according to data from the Illinois Department of Employment Security. But the metro’s unemployment rate actually fell over the same period. This suggests people are dropping out of Decatur’s labor force altogether.

Furthermore, its manufacturing base is being hollowed out. Since the turn of the century, Decatur, like the rest of Illinois, has seen a massive reduction in the number of people manufacturers employ. In 2000, Decatur had 14,000 manufacturing jobs, but by 2016 manufacturing jobs had dropped 28 percent to a little more than 10,000, according to figures from Illinois Manufacturers’ Association CEO Greg Baise reported in the Herald & Review.

Companies continue to reduce operations and some have even pulled out completely. Meda Pharmaceuticals, for example, announced in March 2017 its plans to close its Decatur plant. Though there is an occasional transfer or influx of manufacturing jobs into the city, in general, residents of Decatur have seen manufacturing jobs grow scarcer and scarcer. Meanwhile, workers in neighboring states are seeing much stronger manufacturing recoveries.

Illinois’ economic policies make it harder to compete with other states for coveted manufacturing jobs. The Prairie State has the highest workers’ compensation costs in the Midwest and some of the highest property taxes in the nation, at double the national median. Not only do high property taxes hurt homeowners, but they also take a toll on businesses of all sizes, including manufacturers.

This points to another possible reason for Decatur’s population decline: the area’s relatively high tax burden. Research from the nonpartisan Tax Foundation shows the median property tax bill for a Macon County homeowner is $2,004 annually. Macon County’s median property tax bills are above the state median – in a state that itself has some of the highest property taxes in the nation.

And the General Assembly has done little to help reduce the overall tax burden.

In 2011, lawmakers hiked the state income tax 67 percent, raising the state individual income tax rate to 5 percent, up from 3 percent. Though billed as temporary, the individual income tax rate never returned to its previous rate of 3 percent, but dropped to 3.75 percent in 2015 from 5 percent.

Middle-class Decaturites, however, never really felt the full effects of the drop in the income tax. Though there was a partial sunset of the 2011 income tax hike in 2015, that same year the Decatur City Council voted to raise the property tax levy by nearly 15 percent.

These tax hikes at both the state and local levels didn’t happen in a vacuum. Lawmakers raised these taxes during a time when Illinoisans experienced almost no income growth. During the Great Recession era, Illinois tied with Nevada for the worst personal income tax growth in the nation, as incomes only grew 0.8 percent each year.

Despite these hardships, there’s no sign help is going to come from the Statehouse. On the contrary, lawmakers passed the largest permanent income tax hike in Illinois history in summer 2017, raising the state individual income tax by 32 percent, to 4.95 percent from the previous rate of 3.75 percent.

Increasing state and local tax burdens, combined with stagnant income growth, are going to hurt residents wherever they reside – and give many a reason to leave. Decatur has seen that firsthand.