Thursday, March 11, 2010 01:01 am
Communities demand solutions for pension burden
Coalition calls for statewide public safety pension reform
According to Mayor Tim Davlin, almost 100 percent of property taxes collected in Springfield go to police and fire pensions. In accordance with state law, the city’s public safety employees receive retirement funds, which can total up to 75 percent of their final pay rate if they retire at age 50 and have held the job for a minimum of 30 years.
Pension costs are rising, and Illinois communities can’t meet the demand. With more funding going toward public safety pensions, Springfield can’t invest in new employees or equipment, Davlin says.
“Property taxes don’t go to fill a pothole or to help man a fire station or put a police officer on the street — it just goes to the pension fund,” he says.
As current president of the Illinois Municipal League, Davlin has championed the cause of pension reform and the need to decrease the financial burden on cities. As mayor, however, Davlin in recent months approved two separate pay hikes for retiring former Springfield Police Chief Ralph Caldwell, upping his final salary (on which the pension is based) by $10,000.
A coalition of more than 200 communities and business leaders called for statewide public safety pension reform last week, urging the General Assembly to develop a system that would protect taxpayers, as well as ensure sustainable employee benefits.
“Maintaining the status quo is not sustainable, and is placing an unfair burden on our municipalities,” says coalition supporter Rep. Pamela Althoff (D-Crystal Lake).
Representatives from “Pension Fairness for Illinois Communities” urged the legislature to enact a plan that would create a modified pension system, equalize contribution amounts between employers and employees, consolidate all pension funds into one statewide investment system, extend the deadline for when pensions must be fully-funded and require a supermajority (a three-fifths vote) in the General Assembly to approve benefit increases.
A recent report from the Commission on Government Forecasting and Accountability says Springfield’s contributions to police and fire pension funds increased by 65.8 percent between 2004 and 2008. Additionally, the General Assembly mandated $5,023,305 in additional benefits for Springfield’s public safety employees during the same time period, the report says.
Cities and municipalities have no say in these increases, Davlin says, but they’re still expected to pay for them.
“For far too long, communities such as ours have not had a voice in the issue of skyrocketing pension costs,” he says. “The retirement benefits mandated by the state legislature have caused many of our municipal governments to be right on the verge of bankruptcy, and jeopardizing the financial security and stability of our communities.”
If communities funnel most of their money into pensions, it could, ironically, jeopardize public safety, says Rep. Karen May (D-Highwood), who spoke on behalf of the coalition last week.
“Many communities are literally reaching their breaking point right now,” May says. “They’re between a rock and a hard place, as they struggle to keep up with rising costs of public safety pensions, while still being able to provide basic services for their residents.”
Communities may have to raise property taxes if they hope to make any dent in the pension gap, says Mark Denzler of the Illinois Manufacturers Association. The pension problem, he says, extends beyond being a public safety issue — it’s also a jobs issue.
Property taxes could increase as much as 15-20 percent, Denzler says, and those costs are incurred by businesses and manufacturers.
“Property tax increases, because of the pressure on public pensions, will only further cripple Illinois’ economy and make it more difficult to do business in the state,” he says.
Additional benefits passed by the General Assembly have cost the state $12.1 million, Davlin says.
Two public safety pension reform bills were recently introduced. Legislation that would raise the retirement age for police and firefighters from 50 is also in the works, the coalition says .
Contact Diane Ivey at email@example.com.