City of Springfield needs $269M in tax hikes to fund pensions
The city of Springfield needs nearly $270 million more in revenue to meet the required contributions to its pension funds for retired police officers and firefighters.
Local leaders in Springfield have learned the city is severely short of the revenue needed to fund its police and fire pension systems over the next two decades.
Springfield budget director Bill McCarty in an August presentation told local officials the city needs an additional $269 million for its public safety pensions to reach 90% funding by 2040, according to the State Journal-Register. McCarty said the city’s projected growth in pension costs is “much larger” than expected revenues.
Under state law, downstate police and fire pension systems must achieve a funding ratio of 90% by 2040.
Despite residents paying some of the nation’s highest property taxes, Springfield’s local police and fire pensions are only 44% and 52% funded, respectively, according to the most recent data from the Commission on Government Forecasting and Accountability. Combined, the two pension funds have more than $306 million in pension debt.
The city faces a difficult choice that has been plaguing other communities across Illinois: cut services or raise taxes – or both.
Springfield has for years seen its municipal labor force shrink under the weight of mounting pension pressure. Today, there are 30 fewer police officers than there were 12 years ago, McCarty told the Journal-Register. He said consolidating local pension funds is one step the city could take to save costs. While that could make pension funds more efficient, consolidation alone would not generate nearly enough savings to close the city’s pension shortfall.
Springfield isn’t alone: The city of Peoria has cut its workforce by up to 18% over the last five years thanks to out-of-control pension costs, according to the Journal-Register. Over the last decade, Peoria has seen its annual public safety pension costs double to $20 million from $10 million. Peoria residents see 95 cents of every property tax dollar for police captured by police pensions, which is projected to increase to 100% of property tax collections next year. What’s worse, every property tax dollar intended for fire services goes to firefighter pensions.
Illinois spends nearly double the national average on pensions, measured as a percentage of all state and local government spending – more than any other state in the nation. Without meaningful reform, more Illinois municipalities will continue to ask residents to foot the bill for rising pension costs.
State lawmakers must amend the Illinois Constitution to address the pension crisis, and to protect taxpayers as well as the retirement security of those enrolled in the pension systems.