Monmouth slated to hike property taxes to fund pensions
Cities across Illinois have been forced to slash services and hike taxes to make room in the budget for pension costs.
For the second year in a row, the city of Monmouth, Illinois, is poised to hike property taxes on its residents to pay for quickly growing pension costs.
“Unfortunately, we have to increase the property-tax levy due to the funding of police and fire pensions … Everything else stays the same. We are not increasing the city’s spending whatsoever,” city Mayor Rod Davies told Matthew Dutton of the Daily Review Atlas.
That means Monmouth residents won’t be paying higher taxes to fund road repairs or additional services. Instead, every dollar of the tax hike will be dumped into the city’s police and fire pension funds.
Monmouth’s fire pension fund has just 39 cents for every dollar it should have to pay for future benefits, according to the city’s most recent financial analysis. The police fund, just 49 cents.
Monmouth sits on nearly $13 million in unfunded police and fire pension liabilities today.
Sadly, the city’s struggle to pay for rising pension costs isn’t unique in Illinois.
A great deal of Illinois’ 650 local pension funds are nearing insolvency; many having less than half the funds they need to pay for future benefits. In aggregate, local pension debt in Illinois – excluding Chicago – grew to more than $12 billion in 2010 from just $1 billion in 2000.
Cities across the state have been forced to slash services and hike taxes to make room in the budget for pension costs.
Springfield, Illinois, has already closed three library branches, shrunk its police department by nearly 15 percent since 2007 and tripled its general fund taxpayer contributions to city pension funds since 1999. Peoria, Illinois, made major cuts to its public works staff, added new utility and gas taxes, and doubled trash-collection fees.
The problem is local officials have their hands tied when it comes to pension reform. The Illinois General Assembly sets municipal pension laws with no regard to whether the local budget and taxpayers can afford them.
“[T]he state legislature has increased benefits for retirees and their dependents without addressing anything else. These enhancements are a compounding issue,” said Monmouth City Administrator Lowell Crow to the Daily Review Atlas.
As long as state politicians are in control of local pension systems, local governments will be forced to increase taxes and cut services.
Monmouth is yet another example of why it’s time to give local governments control over their own pension systems in Illinois.