Peoria mayor on pensions: ‘We’ll never catch up, not in our lifetimes’

Peoria mayor on pensions: ‘We’ll never catch up, not in our lifetimes’

Peoria leaders said they are in ‘survival mode’ and need to take $4 million from this year’s budget to help make pension payments for the next two years. The mayor calls for state action to fix the pension debt crisis.

Peoria Mayor Rita Ali said her city has little option other than to take $4 million out of the current year’s budget to help make the city’s public safety pension payments for the next two years.

“The only choices that we have right now until we can work with Springfield to fix the broken system is those band-aid approaches, those short-term strategies because we’re in a survival mode,” Ali said.

“We have a broken pension system throughout the state of Illinois, we’re not the only ones that are experiencing these huge liabilities. Under the current structure we have, we’ll never catch up, not in our lifetimes.”

Peoria currently contributes $27 million to pensions each year, but should be contributing $40 million a year, City Manager Patrick Urich said. The city needs $360 million to fund pension liabilities in 2040, and anything less than $40 million a year will leave it short.

Statewide, there is $75 billion in debt to local pension systems. Add to that the debt for the five statewide public employee pension systems, and the grand total hits $219 billion.

Peoria imposed a public safety pension fee on property owners in 2018 as a short-term measure to reduce pension liabilities while council members considered alternatives to pay down the city’s debts. Property taxpayers paid $2 million a year through the fee until council members voted Nov. 9 to end it, sparing residents up to $300 per property annually.

Long-time Peoria resident and apartment building owner Katie Vandenberg said the city’s short-term solutions to long-term pension problems is nothing new.

“From the perspective of a landlord or a resident, it’s frustrating because they have mismanaged pensions for decades in Peoria,” Vandenberg said.

“Peoria has a diverse level of income. We try to keep our rates down and within reason for people and not every landlord does. I think people try but I’ve got a lot of tenants on fixed incomes and when we get hit with these silly fees and taxes, it makes it really hard to do while keeping up our properties the way they need to be.”

“There are landlords with 200 properties and that makes a huge difference for them,” Vandenberg said. “It’s like they’re just trying to Band-Aid these problems.”

The $4 million cut to the current budget was approved Nov. 23 by the Peoria City Council as part of its budgeting for the next two years. The move came two weeks after council members discontinued the public safety pension fee because it had failed to put a dent in the city’s pension debt.

Councilman Zachary Oyler cautioned the city’s record spending will soon eclipse revenue.

“It’s revenues and expenses and we’re budgeting to spend more money than we’re budgeting to bring in at a time where we have record numbers of both,” he said.

The biennial budget includes $262.3 million in spending in 2022 and $242.1 million in 2023.

Fourth District Councilman Andre Allen agreed the pension proposal was not the city’s ideal option, but said he believes the $4 million deferment is the right solution at this time.

“We have excess revenues and it would be great to save those for a rainy day and continue to keep building our coffers up, but we’re able to fulfill our pension obligations and we’re able to do that without cutting public safety and we’re able to restore jobs that were lost to COVID-19,” Allen said.

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