Belleville passes $1.2 million property tax hike to pay for pensions

Belleville passes $1.2 million property tax hike to pay for pensions

Belleville aldermen approved a 12 percent increase in the city’s property tax levy.

Property taxes in Belleville could be going up, thanks to the Belleville City Council’s decision to authorize a 12 percent increase in the city’s property tax levy. The city plans to use most of the additional revenue – $1.2 million – for rising police and fire pension costs, according to the Belleville News-Democrat.

The City Council reached the decision Dec. 18, with 10 aldermen voting in favor of the property tax levy increase, one voting against, two abstaining from the vote, and three aldermen absent from the vote.

Belleville Mayor Mark Eckert, who also serves as the president of the Illinois Municipal League, said, “The pension situation is a problem of immense proportions throughout the state of Illinois,” according to the Belleville News-Democrat.

Belleville’s property tax levy will rise to $11.3 million, up from the current $10.1 million. The levy increase is more than twice as high as the 4.67 percent increase passed in 2016.

However, if history is any indicator, this latest infusion of cash from homeowners to police and fire pension funds is not likely to solve the funds’ long-term fiscal problems.

From 2012 to 2016, taxpayer contributions to Belleville’s fire pension fund rose by more than 34 percentaccording to the Illinois Department of Insurance’s 2017 Biennial Report. However, despite the large uptick in city dollars, the fund has less than 43 cents on hand for every dollar needed to pay out future benefits.

Despite the increase in taxpayer contributions, the pension’s funding ratio climbed less than two percentage points in four years, to 42.9 percent in 2016 from 41.4 percent in 2012.

Belleville’s police pension fund is not much better off, as it only has 53 cents on hand for every dollar needed to pay out future benefits.

The long-term solution to this crisis would be to give new police and fire employees 401(k)-style plans instead of costly pensions. That plan could be modeled on the State Universities Retirement System’s 401(k)-style retirement plan already in place for state university workers. The plan has been operating for nearly two decades, and more than 20,000 employees have opted out of the traditional defined-benefit pension plan in favor of the 401(k)-style plan.

However, Belleville could not implement this plan unilaterally. The state mandates that towns like Belleville maintain pension funds for police and professional fire departments, which severely limits local leaders’ ability to deal with mounting pension crises.

Belleville taxpayers shouldn’t be on the hook for continued pension failures. Belleville and other towns should have the tools necessary to embark on real pension reform efforts, and the freedom to determine how they should compensate city workers. The state’s pension mandate, coupled with the Illinois Constitution’s pension protection clause, makes property tax hikes virtually inevitable for many Illinois communities, such as Belleville.

This persistent problem demonstrates the need for state lawmakers to protect homeowners from skyrocketing property tax bills. Passing a property tax freeze on homeowners’ actual bills (not just the levies of local governments), and requiring voter approval for property tax hikes are two powerful reforms that would go a long way for families struggling to pay higher property taxes as their own incomes stagnate.

Lacking real change from state lawmakers, Belleville homeowners should get ready for higher property tax bills.

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