Springfield’s pension crisis
The city of Springfield’s local pensions are in crisis. But instead of facing this problem head on, Springfield Mayor Mike Houston is quibbling over what he calls “flaws” in a comprehensive report by the Illinois Policy Institute that measures the fiscal health of Illinois’ 114 largest cities. Our report found that Springfield scored worst among...
The city of Springfield’s local pensions are in crisis.
But instead of facing this problem head on, Springfield Mayor Mike Houston is quibbling over what he calls “flaws” in a comprehensive report by the Illinois Policy Institute that measures the fiscal health of Illinois’ 114 largest cities.
Our report found that Springfield scored worst among the state’s 20-largest cities and ranked 112th of the 114 cities audited.
Here’s why:
Taxpayers are tapped out. Since 1999, taxpayer contributions toward city-worker pension costs have tripled to more than $27 million, three times faster than the rate of inflation.
Taxpayers are now putting in $4 for every $1 city employees put into the pension system.
And yet Springfield households are on the hook for double the amount in city-worker pension debt they were burdened by a decade ago.
City services are being cut. Since 2008, library personnel has been reduced by 36 percent, sworn police officers by 9 percent and public-work positions by 26 percent.
City worker retirement funds are dangerously underfunded. Collectively, Springfield’s pension funds have just more than half the money they need to pay for future obligations. And things will only get worse from here. The city now has more retirees drawing from the pension funds than it has active workers contributing to it.
The mayor may quibble over the numbers, but pension costs are swallowing his budget. Taxpayers are paying more and getting less, but city worker retirements are no more secure.
And yet the mayor chooses to call the Institute’s numbers “flawed.”
First, he wrongly disputes our numbers on property taxes. Our paper explicitly reports that general fund property tax revenues, those that exclude tax revenues dedicated to items such as bond repayments, are not enough to pay for pension costs. The city’s own 2012 Tax Levy and Rate report shows that more than 95 percent of the tax levy costs go to pensions, up from 66 percent in 2006.
Second, he claims the city has not raised taxes to pay for pensions – that any tax increases have gone toward infrastructure. We agree, and that was precisely our point.
As the city’s own tax levy shows, pension costs are consuming all general fund property taxes. That’s why the mayor has had to raise other taxes to make ends meet.
Third, the city claims the Institute did not properly account for pension payments made by the city on behalf of its Electric Light and Power Fund.
But even if the Institute excludes from its calculations the city pension payment made on behalf of the fund, it does nothing to change the gravity of Springfield’s pension problems.
Springfield’s audit score only moves to 22 from 18 (out of 100), leaving it tied with Evanston as the worst of Illinois’ 20-largest cities. And the city’s ranking among the 114 cities audited improves by only six places to 106th, still among the state’s worst.
Mayor Houston needs to stop defending the status quo. He owes it to his residents to be a champion of real pension reform by putting pressure on state legislators. After all, they are the ones who dictate the benefits that must be paid out by Illinois municipalities.
Our report gives him the ammunition he needs. But first he’s got to face reality.