Brief details crushing weight of pension costs for Illinois municipalities
More than 20 police and 10 fire pension funds were less than 30 percent funded in 2012.
Municipalities across Illinois will be unable to make pension payments to their retirees without reform, according to the Illinois Municipal League.
The Illinois Municipal League, a nonprofit organization that represents 1,121 municipalities in Illinois, filed an amicus brief this week with the Illinois Supreme Court. The brief argues that: “The end game for the most distressed of these communities is clear – without modest reform in the near-term, and despite their best intentions, they will be unable to make scheduled payments to their retirees.”
Ballooning pension costs are a very real crisis for many municipalities in Illinois. An increasing share of municipalities have been forced to increase taxes and shrink their police and fire headcounts to handle increasing pension costs.
The Illinois Municipal League outlines a series of examples to show the severity of Illinois’ municipal pension crisis:
Local pensions systems are grossly underfunded
More than 20 police and 10 fire pension funds were less than 30 percent funded in 2012. Here are some of the most alarming shortfalls:
- Park City’s pension system is less than 17 percent funded.
- Madison’s pension system is less 20 percent funded.
- Cairo’s fire pension system is less than 18 percent funded.
- Kankakee’s fire pension system is less than 19 percent funded.
- Danville’s fire pension system is less than 25 percent funded.
Tax hikes, fee increases and borrowing
The brief states that “municipal taxes are cumulative, adding to existing national, state and county taxes, which makes it difficult to raise them beyond relatively low levels without losing significant population.”
But many municipalities have resorted to tax hikes, fee increases and borrowing to fund pensions.
The following cases were noted:
- Caseyville, a village in St. Clair County, increased property taxes by 17.5 percent.
- Monmouth, in Warren County, increased property taxes by 9.7 percent.
- LaSalle, in LaSalle County, increased property tax by 10.6 percent.
- Peoria imposed new utility taxes and doubled its garbage-collection frees.
- Stone Park, in Cook County, issued $2 million in municipal bonds to improve funding of its police pension system to 23 percent, from 7 percent.
Cuts to police and fire departments
Other municipalities have been forced to reduce their police and fire headcount. Examples include:
- Lyons, a village in Cook County, cut one-third of its police force.
- Danville passed a budget that allows for an 18 percent reduction in the number of firefighters and for the closure of one of the city’s four fire stations.
The brief argues that the alternative to pension reform is “a rule requiring citizens—including our children and future generations, as well as the pension recipients themselves—to suffer, while municipalities with no effective way to increase revenue are forced to default on payments to deserving retirees.”
But municipalities in Illinois can’t reform their pension systems, even if they wanted to. The Illinois state legislature sets municipal pension laws with no regard to whether the local budget and taxpayers can afford them, and municipalities are forced to pick up the tab.
It’s time to end state control over local pensions and give municipalities the ability to implement retirement systems that best fit the needs of their budgets, taxpayers and public employees.