Category: huffington post

Buyer Beware: Property Taxes in Chicago Only Going Up

by Hilary Gowins, posted in huffington post

Nobody buys a house without checking the fine print: What’s the crime rate in the neighborhood? How are the schools? What was last year’s property-tax bill?

For prospective buyers in Chicago, what’s missing from the equation is how much property taxes will go up in the future.

It’s not a good time to invest when the bottom’s falling out, and the foundation is slowly crumbling beneath the city of Chicago, which has a more than $34 billion pension-debt problem.

In spite of the city’s dire financial straits, however, Chicago realtors are experiencing a boom this summer, as prices are rising in the city and good listings are moving within a matter of days.

With average rent at nearly $2,200 per month, many Chicagoans in their 20s and 30s are opting for a mortgage instead of a lease.

But anyone thinking of investing in property in Chicago should read this disclaimer: Your taxes are going to skyrocket in the next few years, and, for the most part, your money will be going toward debt payments and pensions, not city services.

Illinois homeowners already face the second-highest property tax burden in the country, according to the nonpartisan Tax Foundation. Property taxes in the city are relatively low compared to those in the suburbs, though property taxes in the city went up by an average of $90 in 2014 according to Cook County Clerk David Orr. Property taxes on a home worth $199,000 totaled more than $3,300.

Property taxes are sure to continue rising in the city, with one main driver: public pensions.

For years Chicago has pushed off the harsh realities of its mounting pension debt in lieu of continuing to operate as if the problem didn’t exist.

But that approach is starting to come apart at the seams.

Chicago Mayor Rahm Emanuel is floating a proposal to increase property taxes by$175 million over one year just to pay for contributions to the teacher pension system, which is $9.6 billion in debt and has less than $0.50 for every dollar needed to pay out benefits.

Chicago Public Schools, or CPS, faces a $1.1 billion deficit for fiscal year 2016. CPS just made good on a $634 million payment to the teachers’ pension fund byborrowing and making stark cuts: more than 1,000 workers will lose their jobs and the CPS budget will be slashed by $200 million. Unfortunately, these cuts are par for the course for CPS over the past several years. In 2013, CPS closed 50 schoolsand laid off nearly 3,500 teachers and staff.

But teachers aren’t the only ones who get pensions in Chicago.

The pension fund for Chicago firefighters has $3.1 billion in pension debt, and just $0.24 of every dollar needed to pay for benefits.

The police pension fund has $6.9 billion in debt and less than $0.30 of every dollar needed to pay benefits.

All in, Chicago owes $34.5 billion in pension debt. That breaks down to $33,500 per Chicago household.

Where will the city turn to get out of this hole? Likely, officials will try to continue totake on debt, though this will become a much costlier option, given the city’s junk rating and extreme debt levels. That means the city will be more likely to hit up homeowners, and Emanuel’s one-year, $175 million property-tax increase proposal is just the beginning. An April 2015 study from Nuveen Asset Management revealed Chicago would need an aggregate property-tax increase of well over 50 percent for Chicago government to start tackling its pension crisis.Another estimate pegs the property-tax hike at 60 percent. Analysis from Crain’s Chicago Business suggests that property taxes could go up by 30 percent this year alone.

At the same time the city’s obligations are skyrocketing, its population is growing at a snail’s pace, gaining just 82 residents in 2014. With 2.7 million residents as of 2014, Chicago’s population is the same as it was in 1920.

City leaders are in a bind: Raising revenues on a stagnant tax base is a risky game. Drive any more residents out to greener pastures and that tax base will begin to shrink. This was the nail in Detroit’s coffin.

Big changes to the way city government operates are necessary if Chicago is to dig itself out of this hole. Ending special property-tax carveouts is one good place to start. Emanuel announced plans to freeze seven tax increment financing, or TIF, districts, freeing up $250 million over the next five years, according to the Chicago Sun-Times. TIFs use a portion of property-tax revenues generated in these special economic zones to give tax incentives to private developers located in these districts. Since 1986, Chicago has collected $6 billion in TIF funds, according to the Cook County Clerk. That’s $6 billion in a slush fund to subsidize private development projects, not school, park and library districts.

Sunsetting TIFs and uncovering hidden wealth won’t be enough, however – Chicago will need serious structural overhauls to end its pension bleed. Otherwise the city’s pension monster will eat Chicago alive.

Chicago Now Home to the Nation’s Highest Sales Tax

by Hilary Gowins, posted in huffington post

Originally published on Huffington Post.

Buying local just got a lot less appealing for Chicagoans.

The city reclaimed the highest sales-tax rate in the nation on July 15, when the Cook County Board, which oversees Illinois’ largest city, voted to raise its portion of the sales tax, bringing Chicago’s combined rate to 10.25 percent from 9.25 percent.

Chicago is now right back where it was in 2008, when the county raised its rate to 1.75 percent from 0.75 percent (the same leap as the 2015 increase).

Former Cook County Board President Todd Stroger hiked the sales-tax rate in 2008, and lost his re-election bid to current Board President Toni Preckwinkle in 2010. Back then, Preckwinkle benefited from momentum against Stroger’s unpopular tax hike, which she ultimately peeled back. But her quick about-face shows Chicago politicians increase and decrease the sales-tax rate as it’s convenient.

A sales tax is one of the most transparent ways for government to raise revenues, but it doesn’t exist in a vacuum. Chicago imposes its sales tax on top of myriad other taxes residents pay, including property taxes, and other taxes and fees.

Mayor Rahm Emanuel has also revealed a plan to increase Chicagoans’ property taxes by $175 million over one year to cover city debt.

Unfortunately, other factors make it expensive to live in the city, as well. Illinois has the highest cellphone taxes in the nation. In July, City Council passed a 56 percent increase on the city’s cellphone surcharge, adding an additional $84 in taxes each year for a family of four with four cell phones and a landline. In 2013, City Council raised the tax rate on cable to 6 percent from 4 percent – the city is raising the rate again, this time all the way up to 9 percent, costing Chicagoans an extra $12 million in taxes, according to the Chicago Sun-Times. Now the city is foisting an additional 9 percent tax on online streaming services such as Netflix.

Property taxes, surcharges and entertainment taxes are all methods City Council has been using repeatedly as a method to drum up revenue to fund the city’s financial problems. But Chicago’s population is growing at a snail’s pace, gaining just 82 residents in 2014 after a decade of population decline.

Chicago leaders can only squeeze so much out of the city’s remaining residents.

Don’t Be Fooled By ‘Taste’ – New Flavors Are Frowned Upon in Chicago

by Hilary Gowins, posted in huffington post

Originally published on Huffington Post.

Chicago likes to shackle food-truck operators.

Food trucks can’t operate within 200 feet of a brick-and-mortar business that sells food. Food trucks must have a GPS tracking device so government officials know where they are. Food trucks can only sell food in 35 city-approved, specifically designated locations.

But from July 8-12, 60 vendors will serve food from stands – outside, from carts, tents and trucks at the city’s 35th annual Taste of Chicago.

Most of the vendors are brick-and-mortar restaurants, such as The Purple Pig, Lou Malnati’s and Billy Goat Tavern & Grill. Fifteen food trucks, some of which also have a brick-and-mortar presence, will be at the food festival as well.

Though brick-and-mortar restaurants and food trucks will be comingling at the festival, their relationship remains tumultuous.

In 2012, the city approved restrictive new rules that limited proprietors’ ability to do business in the city. A year later, Emanuel joined the Food Network on its show“The Great Food Truck Race” for an episode titled “Chicago is a food truck kind of town.”

“We remain committed to creating the conditions and opportunities that will allow this industry to thrive, create jobs and support a vibrant food culture across Chicago,” Emanuel said in a 2013 statement.

Rahm’s words don’t line up with the consistent actions he and other city leaders have taken for years. The truth is, Chicago isn’t a food-truck town – it’s a special-interest city, where political connections reign supreme and organic innovation is seen as a nuisance that would upset the established order of things.

Those backing the city’s restaurants make no secret that the main driver behind the city’s oppressive rules is to protect established businesses.

Alderman John Arena, 45th Ward, who cast the only “no” vote on the 2012 ordinance, said: “A brick-and-mortar restaurant lobby got ahold of [the ordinance], and it was stuffed with protectionism and baked in the oven of paranoia.”

So while Rahm’s words describe a city that welcomes food-truck innovation with open arms, his actions prove the city wants to keep the industry on a short leash.

“Opening and operating a food truck in Chicago is somewhere between difficult and impossible,” said Robert Frommer, an attorney for the Institute for Justice. “The city has put together a menagerie of rules that seem almost intended to make it as hard as possible to open up and be successful.”

Taste of Chicago offers an illusion of a city where powerful players coexist with new flavors. But this veneer is far from reality. Once the festival packs up and Grant Park clears out, Chicago will go back to normal: a brick-and-mortar oasis, shielded from competition from outsiders.

As Illinois Suspends Corporate Tax Breaks, It’s Time to Recognize How Special Treatment Undermines a Welcoming Economy for All

by Hilary Gowins, posted in huffington post

Originally published on Huffington Post.

In the wake of Illinois state lawmakers passing a budget with a nearly $4-billion deficit, Gov. Bruce Rauner on June 2 froze two flagship tax-credit programs administered by Illinois’ Department of Commerce and Economic Opportunity.

Proponents of the Economic Development for a Growing Economy, or EDGE, andIllinois Film Tax Credit programs say they’re necessary to make the state competitive — acknowledging that lower tax burdens boost growth. The catch? Through selective tax breaks, the state gets to pick who succeeds.

Illinois’ budget impasse provides an opportunity to examine the existence of these tax credits and what makes them so attractive for politicians desperate to muster some semblance of economic growth.

First, film tax credits.

Starting in 2004, Illinois began giving out millions of dollars’ worth of tax breaks for TV and film production.

An influx of film and television activity has cropped up across the state: Superman found a temporary home in Aurora; the Dark Knight and the Joker squared off on LaSalle Street in front of the Chicago Board of Trade; and the cast of Empire, a show set in New York, has made a film studio on the west side of Chicago its home.

Illinois gave out $26.5 million in film tax credits between August 2013 and June 2014 alone, according to data obtained via Freedom of Information Act request from the Department of Commerce and Economic Opportunity. Politicians point togrowth in spending from the film industry and tout government’s ability to manipulate policy to trigger job creation. Every so often, someone in Illinois recognizes the spot of a memorable movie scene.

They also recognize a broken state when they see one.

Because jobs are scarce and the cost of living is high, people continue to flee the state. In 2014, 95,000 more people left Illinois for other states than moved to Illinois from other states — an all-time record high. There are 244,000 fewer Illinoisans working today than when the Great Recession began.

While the rest of the state is suffering, the film industry is enjoying sales- and income-tax breaks. But the film industry isn’t alone in receiving special treatment from the state. Since 2001, Illinois has given out more than $1 billion to the biggest businesses in the state through the EDGE tax-credit program, which is meant to spur economic growth.

It’s not working. Over the course of the EDGE tax credit’s life span, Illinois is down 123,000 payroll jobs.

Additional incentives are only necessary when something is unattractive. In the case of these two tax-credit programs, the state is seeking to address the high cost of buying goods (by providing sales-tax breaks) and the high cost of doing business (by providing income-tax breaks) in Illinois.

The Illinois Film Tax Credit allows for a 30-percent tax credit for qualified production spending. This concept is not a bad one, as it allows businesses to avoid paying taxes on business inputs (a practice that results in repeated taxation across the chain of production). The state, through the film tax credit, acknowledges that multiple layers of sales taxation hinders job creation but only applies an exemption from this financial strain to certain players in a certain industry.

Both the Illinois Film Tax Credit and EDGE tax credits also allow for tax breaks on income, which is a perk that small businesses and regular taxpayers do not enjoy. If the state realizes that industries won’t set up shop in Illinois without a lowered cost of doing business, then why doesn’t it address the underlying problem instead of handing out piecemeal tax breaks?

Solutions already exist that would make Illinois a more appealing place to do business.

For starters, lawmakers should fix Illinois’ workers’ compensation laws, which have led to the seventh-highest workers’ compensation costs in the nation. That seventh-worst ranking is after half-hearted reforms in 2011.

Good tax policy shouldn’t be restricted to select industries. If Illinois politicians want sustainable jobs growth, lower taxes should be applied across the board, not just to the politically connected.

Want to Fix Illinois’ Economic Development Agency? Put it Out to Pasture

by Hilary Gowins, posted in huffington post

Originally published on Huffington Post.

Illinois’ economy is sputtering. And it’s not because the state’s economic development agency isn’t doing its job. In fact, it’s partly because the agency exists in the first place.

For years, Illinois’ economic development agency, the Department of Commerce and Economic Opportunity, or DCEO, has thrown hundreds of millions of dollars at the biggest companies in the state, leaving taxpayers with the bill and small-business owners struggling to succeed on an unequal playing field.

The growth-through-giveaway approach has failed miserably – Illinois has 56,000 fewer people working since the DCEO’s biggest program got started in 2001. And privatizing the agency – as state lawmakers are now suggesting – won’t make it work.

A new proposal from state politicians, House Bill 574, would privatize much of the DCEO’s responsibilities, creating a public-private partnership entity called the Illinois Business and Economic Development Corp. This entity would “focus on business development, small and minority-owned business incubation, trade and investment, tourism and film.”

But whenever the state gives big businesses grants or tax credits, the money has to come from somewhere: namely, taxpayers and other businesses.

The DCEO’s model has already proven a simple truth: Healthy economic growth doesn’t come from selective government handouts. If you measure the DCEO based on results, it has failed miserably. The largest DCEO tax-credit program is the Economic Development for a Growing Economy, or EDGE, tax credit, which began in 2001. The entire purpose of the EDGE tax credit is to incentivize businesses to expand and create new payroll jobs in Illinois. But after more than 13 years and nearly $1 billion in EDGE tax credits, the state is actually down 186,500 payroll jobs, a stunning record of failure.

What’s worse, for more than a decade, Illinois has been giving select businesses many millions of dollars more in tax credits than the law allows. The EDGE program is intended for companies seeking to expand and hire more workers in Illinois; not to help companies maintain existing workers.

But the DCEO has been giving tax credits to companies that simply retain employees. The Liberty Justice Center has filed a lawsuit, Jenner v. DCEO, which seeks to stop this illegal practice. The lawsuit alleges it’s possible that as much as half of the nearly $1 billion in EDGE tax credits approved over the life of the program violated the limits established in the law.

Not only is the DCEO handing out illegal subsidies, but politicians also make use of it to curry favor and create the illusion of jobs growth.

Former Gov. Pat Quinn did just that in October 2014, one month before he was up for re-election. That month alone, Quinn authorized $37.4 million in major grants to four big companies and two influential incubators.

Failed economic stimulus and rampant abuse of tax dollars always come into play when government gets into the business of picking winners and losers.

Knowing the DCEO is broken might make it tempting for politicians to create a public-private partnership to carry out similar functions. But public-private partnerships like the proposed Illinois Business and Economic Development Corp. won’t solve these fundamental problems.

In fact, privatizing could help shield the group from the same scrutiny that brought the DCEO’s usefulness into question in the first place. Transparency requirements, such as Freedom of Information Act requests and open records reporting, often do not apply in the case of public-private partnerships, leaving taxpayers in the dark on how their money is spent.

For example, Jobs Ohio, a similar program, has been plagued with a lack of transparency because the “public-private” hybrid structure allows it to be considered a private organization. The program regularly subsidized donors to Gov. John Kasich and his legislative allies, and Jobs Ohio ran ad campaigns to trumpet its economic success – not unlike how Quinn used Illinois’ DCEO.

The DCEO has been a mess – but in attempting to fix one problem, the state shouldn’t create new ones. Illinois shouldn’t have to bribe big businesses to set up and invest here.

Subsidizing legacy businesses misses the point of what actually drives jobs growth: Kauffman Foundation research shows that job creation is driven by younger firms in their first five years. Nationwide, businesses with fewer than fifty employees represent 95 percent of all U.S. companies.

Politicians should embrace economic reforms that make the state a place to which employers want to flock. That includes keeping the tax burden low, eliminating unnecessary red tape and reforming out-of-control workers’ compensation costs.

Illinois needs a lot less DCEO favoritism, and a lot more real economic reform.

Chicago’s Problems Run Much Deeper Than a 76-foot Hole

by Hilary Gowins, posted in huffington post

Originally published on Huffington Post.

The Chicago Spire was supposed to be the tallest building in the United States. Instead of soaring 2,000 feet into the sky, today the foundation plunges 76 feet below ground, sitting abandoned and undeveloped right across from Navy Pier and along iconic Lake Shore Drive. What was to serve as the base for an opulent architectural landmark is just a deep, dark hole taking up prime real estate and reminding the city of what could have been.

The pit is a physical reminder of the unrealized promise of the Spire, but its imagery also reflects the depth of its city’s financial despair.

Behind a veneer of affluence, gilded by the prosperity and staying power of neighborhoods such as the Gold Coast, River North and Lincoln Park, the city’s foundation is crumbling beneath the weight of perilous debt. Chicago and its sister governments are officially on the hook for more than $32 billion in unfunded pension debt. With just over a million households in the city, that staggering figure means each Chicago household is on the hook for $32,000 to cover these liabilities. Chicago’s pension debt exceeds the state’s total proposed operating budget for the upcoming fiscal year.

At the same time the city’s obligations are skyrocketing, its population is growing at a snail’s pace, gaining just 6,000 residents in 2013 after a decade of population decline. With 2.7 million residents as of 2013, Chicago’s population is the same as it was in 1920.

But the city used to be a beacon of hope and prosperity.

In 1884, more than 120 years before the Spire project was unveiled, Chicago became the birthplace of the skyscraper upon the completion of the 10-story Home Insurance Building.

In 1916 author Carl Sandburg gave birth to the nickname, “the city of big shoulders,” a nod to Chicago’s grit and work ethic. By 1890, its population topped 1 million, and it was the fastest growing city in the world. The year before, it had officially become the second-biggest city in the country, according to records from the University of Illinois at Chicago.

Business was booming then, driven mostly by the growth of railroads. Continued rail growth led to the birth of the Union Stockyards, a centralized slaughterhouse built to accommodate Chicago’s growth in the livestock industry. Around 1900, Chicago’s meatpacking industry employed more than 25,000 people and produced 82 percent of the meat consumed in the United States, according to theChicago History Museum. The late 1800s and early 1900s were also the era of the iconic State Street Marshall Field & Co., originally a dry goods store that eventually became one of the biggest department stores in the country.

Chicago was a center of commerce and culture, a booming hub where East met West.

But today, despite activity on the tech front, job opportunities are scarce. The Chicago area has 46,000 fewer people working compared to before the Great Recession, according to the Bureau of Labor Statistics.

In 1851, writers at the Chicago Tribune wrote in the “Annual Review of Commerce” something that still holds true today:

“Essential to the prosperity of cities … It matters but little how great the natural advantages with respect to a location upon navigable water, if [cities] fail to avail themselves of this new element of power, a decline is inevitable.”

Back then the “essential power” was the railroad, and the Tribune writers recognized that this industry would serve as the driver behind future prosperity. Today, economic drivers that would make the city great once more are set backon multiple fronts: the city buries would-be entrepreneurs in paperwork for the fees and permits required to set up shop; it can take weeks or months just to get approval from City Council to start a business; and anyone thinking of opening a business here has to consider the prospect of having to shoulder the city’s heavy debt burden if City Hall can’t embrace reform.

The Spire and those who held its financial obligations filed for bankruptcy in 2013. They owed $77.3 million on the project, according to the Chicago Tribune. Without swift action, the city could suffer a similar fate.

Unlike the Spire, Chicago doesn’t have to keep sinking. If city officials change the way Chicago handles spending and debt, as well as how it fosters business and jobs growth, the city of big shoulders can boom once more.

When the Punishment No Longer Fits the Crime: Cook County and Illinois Seeking Solutions to Broken Criminal-justice System

by Hilary Gowins, posted in huffington post

Originally published on Huffington Post.

Bad guys aren’t the only ones who go to jail.

One in 99 adults are living behind bars in the U.S. This marks the highest rate of imprisonment in American history, according to the Pew Center on States.

Prison overcrowding is an issue across the country, and Illinois is no different.

Its state prisons are operating at 150 percent capacity, with a system designed to hold a maximum of 32,075 prisoners housing 48,653 inmates. Illinois’ prison population has grown 700 percent over the last 40 years.

Overcrowding isn’t a result of increasing criminality (Chicago ended 2014 with crime and murder rates at record lows; violent crime is also down statewide, according to the FBI) — it’s symptomatic of basic flaws in the criminal-justice system, one of which is unjust incarceration.

Cara Smith, the executive director of the Cook County Jail, explains unjust incarceration as the arrest and confinement of people who commit victimless crimes, such as trespassing and retail theft.

What does this look like? A pregnant 30-year-old in jail for 135 days for stealing two plums and three candy bars. Smith said this woman, who she referred to asM.H., was still in jail for this offense when she gave birth to a baby girl she named “Miracle” on Veteran’s Day.

Smith said at the time the jail had about 600 inmates who were there for criminal trespassing or retail theft for under $300.

“I would bet for all 600 of these people, whether you give them a $10 bond or a million dollar bond, they won’t be able to bond out,” Smith said.

Cook County Sheriff Tom Dart released a case study of another instance of unjust incarceration, this time a homeless 51-year-old woman referred to as T.Y. who was arrested for criminal trespassing at Rush Hospital. She sat in jail for 38 days. T.Y.’s case study indicated that, at her last court date, the judge ordered a “behavioral clinical exam” to determine her psychological fitness to stand trial.

Even if the human side of these stories doesn’t prove sympathetic, the financial impact might: These two cases cost taxpayers $24,739.

Offenders are being locked away — sometimes for months — for petty crimes, often for what Smith referred to as “crimes of survival.” Those who commit repeat offenses are not being rehabilitated; they are simply being kept at bay under lock and key.

It’s a system that’s not working — more than half of Illinois’ prisoners end up incarcerated again within three years of release — but the tendency to leap too quickly to new solutions is one that politicians should resist.

“Before we can decide what we need to do to make a change, we have to expose who’s in custody,” Smith said. “Without that information, the public is under the misapprehension that people are in custody because they are bad guys. By exposing these case studies, I think the rest of the system that put people in custody should feel uncomfortable about their policies.”

There’s movement at the state level to seek solutions to Illinois’ broken criminal-justice system as well. As one of his earliest acts in office, Gov. Bruce Rauner issued an executive order creating the Illinois State Commission on Criminal Justice and Sentencing Reform. The commission includes prosecutors, defense attorneys, judges and other experts, all tasked with reviewing sentencing structure and practices, community supervision and the use of alternatives to incarceration, with the goal of finding solutions to the ineffective and expensive system.

Rauner said his goal is to reduce the prison population 25 percent by 2025.

Criminal-justice reform is necessary to remedy a system that is failing on moral and fiscal levels. Today’s system doesn’t rehabilitate inmates and fails to address the underlying causes driving petty crimes. This doesn’t just have ethical consequences — it also eats away at state budgets.

Illinois’ $1.3 billion prison budget was on track to run out at the end of April, and was only saved when the legislature passed supplemental budget appropriations at the eleventh hour.

While structural changes should come only after officials thoroughly assess the system, a simple way to start making sure people like T.Y. and M.H. don’t languish in jail is to move cases through the system more efficiently. The Chicago Sun-Times reported that Sheriff Dart is working on legislation aimed at moving shoplifting and trespassing cases through the system within a month; judges would also be able to “release the defendants on a non-cash bond or electronic monitoring until their trials.”

Other possibilities include imposing tickets and fines for low-level offenses instead of making arrests. Illinois could consider joining 17 states and Washington, D.C., which have already decriminalized marijuana. An Illinois state representative has proposed a new bill that would punish marijuana possession under 30 grams with a fine of $100, and would lower penalties for possession of over 30 grams but less than 500.

Dolly Decorator, or: How to Lobby for Laws That Bully Your Competition

by Hilary Gowins, posted in huffington post

Originally published on Huffington Post.

The class bully is an archetype of American childhood. Maybe he was the biggest kid in the fifth grade. Maybe she cut class and stole lunch money.

Today, school bullies are more skilled in the digital art of mental abuse, using venues such as Facebook and Instagram to troll their victims.

But grown-ups can be bullies, too.

And some of them use the full weight of the law to inflict pain and suffering on the outsiders they don’t want to let in.

Eva Maria Locke knows this all too well. Eva is from Delray Beach, Florida. She has a degree in interior design, and has been approached by friends and acquaintances who want to work with her on design projects. A few years back, she was offered a job revamping a hair salon. Soon after, a friend who practices Chinese medicine reached out about designing a new lobby.

But Eva had to turn down these jobs because she lives in one of just three states that have “practice act” laws on the books, which limit who can practice interior design.

“Florida law says that if you’re a registered interior designer, you can perform design services in commercial spaces – but if you’re not registered with the state, you can only offer design services in residential spaces,” said Ed Nagorsky, general counsel for National Kitchen & Bath Association, a trade group that works in the interior-design industry.

Nagorsky explained that to become registered, prospective designers have to pass the National Council for Interior Design Qualification, or NCIDQ exam. Before you can sit for the test, however, you must have a degree in interior design, complete an internship for two to five years (or more) and pay $1,265 just to take the exam.

“These costs price a lot of people out of the market,” Nagorsky said. “That’s how existing designers restrict the profession.”

These requirements have kept Eva out of a big chunk of potential business. After raising her family, she went back to school in 2005, graduating with her degree in interior design in 2007. After that, she apprenticed under a licensed designer for two years … until that designer had to close up shop in the wake of the Great Recession. Under Florida law, because Eva earned a two-year degree, she needs four years of apprenticeship work under a licensed designer. That left her two years short in the wake of one of the worst recessions in the country’s history, with little hope of finding work that would get her enough apprentice experience to qualify for the exam.

Now she’s in limbo – Eva has a client base and the knowledge to do the job well, but Florida’s regulations have left her unable to get off the ground. People who favor regulations like the ones that exist in Florida might call Eva a “Dolly Decorator,” what Eva described as a derogatory term for unlicensed designers.

“When it suits their interest, pro-regulation people will talk as if there is a clearly recognized distinction between interior design and decoration,” said Clark Neily, an attorney with the Washington, D.C.-based Institute for Justice. “It’s an ego thing.”

The “ego thing” takes on a life of its own in states where interior-design groups like the American Society of Interior Designers, or ASID, try to manipulate the law to limit professional competition. Neily, who represented designers like Eva in a lawsuit over Florida’s interior-design title act in 2009, said ASID has a straightforward approach to molding licensing requirements.

First item on the docket is to get a law on the books called a “title act,” which establishes the precedent for government involvement and a degree of separation between those who are licensed and those who are not. Title acts are less menacing than practice acts – at least on the surface. But according to Neily, these rules are simply the gateway policies through which ASID gets its foot in the doors of statehouses across America.

“They go to the legislature, convince them to pass a law regulating who can use the term ‘interior designer’ and create a board responsible for enforcing that law,” Neily said. “Once they get the title act in the books, the group comes back a while later and says to lawmakers, ‘we’re regulating the title, we really ought to be regulating the work, too.'”

That’s happening now in Illinois, which already has a title act. In March, a state senator presented a new bill that would make the Land of Lincoln the fourth state to license interior-design professionals. The qualifications for a license are rigorous: anyone wishing to practice the full scope of interior design would first need a total of six years of combined education and training experience. An applicant also would have to sit for – and pass – the $1,265 NCIDQ test.

The bill language makes it unclear what design work is legal or illegal for anyone without a license. Guessing incorrectly has serious consequences: The first offense is a Class A misdemeanor; subsequent offenses qualify as a Class 4 Felony, which is punishable by three to six years in prison and a fine of up to $25,000. The bill would also allow the Department of Financial and Professional Regulation to impose a civil penalty of up to $5,000 for each violation.

A law like this does not bode well for anyone not already in the design industry – especially minorities.

Economists Jaret Treber and David E. Harrington of Kenyon College found that“black and Hispanic interior designers are nearly 30 percent less likely to have college degrees than white designers. Thus, regulations with academic requirements disproportionately keep minorities out of the field.” Treber and Harrington also estimated that the number of interior designers fell by 1,300 between 1990 and 2000 in regulated states, “demonstrating that regulation is limiting economic opportunity in interior design.”

Illinois’ proposal is exceptionally harsh. So is Florida’s practice act, especially considering that 47 other states don’t currently limit who can practice interior design.

Trade associations often lobby state legislatures for rules like these to make it difficult for new talent to set up shop, according to the Institute for Justice’s Beth Kregor.

“The laws are shaped by people who have a clear interest in keeping business for themselves, rather than opening the occupation to competition, especially competition that would charge lower prices,” Kregor said.

Regulations like the ones that affect interior designers in Florida cost individuals dearly, and are often the difference between a successful career and putting professional aspirations on the backburner.

“I’m Cuban-American. I came here when I was 3 years old,” Eva said. “I saw my parents lose their home, property and start over with nothing. To me, this was the land of opportunity. But I’ve gotten a huge wake-up call. There are so many people out there who don’t want competition, and once they get in their little club they fight tooth and nail to keep other people out.”