Everything you need to know about North Riverside’s budget battle
On Sept. 12, the village of North Riverside took a big step forward in addressing its budget crisis. The village filed a suit with the Cook County Circuit Court asking for the right to terminate its currently expired firefighters contract. This effort is part of the village’s larger plan to deal with its budget crisis...
On Sept. 12, the village of North Riverside took a big step forward in addressing its budget crisis.
The village filed a suit with the Cook County Circuit Court asking for the right to terminate its currently expired firefighters contract. This effort is part of the village’s larger plan to deal with its budget crisis by contracting fire services with a private provider – saving the village more than $700,000 annually.
There’s a lot of debate and confusion about what exactly is happening in North Riverside. Here are some common questions and their answers:
1. How bad is North Riverside’s budget crisis?
The village of North Riverside faces a fiscal crisis. The village’s $14 million budget has a $1.9 million deficit.
Pension costs are responsible for most of the shortfall. A state law requires the village to increase its police and fire pension payment by more than $1.8 million.
Starting in 2016, if the village fails to make its Annual Required Contribution, or ARC, the comptroller can redirect state money away from North Riverside and use the funds to cover the pension shortfall. As a result, the village would be forced to slash its public safety staff and services.
The village can’t unilaterally reform the pension system. Any local pension reform must first be approved by state lawmakers – who have been unwilling to tackle municipal pension reform in a serious way and are currently on summer break.
2. Can the village increase sales taxes to pay for fire protection services?
No. North Riverside has maxed out its ability to increase its local sales tax rate. The Village sales tax rate is set at one percentage point above the rate levied by the state – the maximum allowed by law.
3. How much would the village need to hike property taxes to balance the budget?
To cover the entire increase in North Riverside’s pension contributions with higher property taxes, voters would need to quadruple their village property taxes.
North Riverside is “non-home rule community,” meaning it is subject to tax caps that limit its ability to increase taxes. A property tax hike large enough to cover the increase in pension costs would first need voter approval via referendum. Such a severe property tax increase is unlikely to earn voter approval.
4. If tax hikes aren’t an option, what could the village cut from its budget to make room for the increase in pension costs?
Spending on public safety – including police and fire – already consumes more than 70 cents for every dollar collected by the village.
Cutting current services would likely result in significant layoffs of public-safety workers. Other than public safety – the cuts would have to come from spending on public works, building, health, zoning or culture and recreation. Annual spending for those services combined totals more than $2 million. There is likely room for more efficiency in these areas of the budget, but not enough to cover their entire budget shortfall.
Plus, when taxpayers and businesses are forced to pay more in local taxes to receive fewer services, they typically leave.
5. So what can be done?
To address the deficit, the village plans to make about $400,000 in cuts – including cuts across departments and reductions in overtime – and use $600,000 of its reserves to cover part of the $1.9 million budget shortfall. But neither of these options will completely remedy North Riverside’s fiscal woes.
One additional solution village officials have proposed is contracting village fire protection services with an outside service provider. This plan would save the village at least $700,000 a year, thereby finding the final savings needed to fill the budget gap. As an additional benefit, North Riverside wouldn’t accrue additional pension debt in future years, thereby lowering long-term costs.
6. How does switching to a private provider of fire protection services save the village money?
The savings come in the form of reduced pension costs. A move to 401(k)-style plans would eliminate North Riverside’s requirement to pay for ballooning pension costs going forward and would give firefighters a retirement they can control and count on. Additional savings would also be captured by reducing costs associated with overtime and workers’ compensation.
7. How would the transition to a private provider work in practice?
When local governments switch from a government-provided fire protection service to a private provider, the new provider often uses the same trucks, equipment and firehouse as the public provider did.
North Riverside would develop an agreement that offers employment to all of the village’s current firefighters. Firefighters would maintain their current base salaries and already-earned pension benefits. Going forward, they will be given ownership and control over their own self-managed retirement plans sponsored by their new employer.
The villages of Lincolnwood and Barrington, Ill., each have contracts with private-sector providers of fire protection services.
The village of Lincolnwood switched to a private provider of fire protection services in 1990. The village purchased all the fire equipment and trucks for the private provider. And the private provider operated out of the same village facilities the public fire department had used until the new fire station was completed a year later.
At the time of the switch, Lincolnwood’s new fire chief, Earl Field, said the fire department’s 27 members would all be certified as firefighters and paramedics with at least two to three years of experience. According to Field, Lincolnwood’s fire department follows safety procedures recommended by the National Fire Protection Association and meets the state fire marshal’s minimum requirements – including training at a state-certified fire academy and meeting standards for equipment, buildings and firefighting procedures.
An additional benefit of having a private provider of fire protection services, as seen in Lincolnwood, is that it eliminates the requirement to fund new pension debt going forward, because salaries and benefits for firefighters are handled entirely by the private provider.