Last week, the Illinois legislature failed to complete pension reform by not passing any legislation regarding public safety (local police and fire) pensions. There was legislation drafted and considered by the Senate, but it was not called for a vote due to opposition from municipalities. Now, you may be asking, “Why would municipalities OPPOSE pension reform that is supposed to save taxpayers money?” Let me explain.
The proposed legislation establishes a 2-tier pension program for police and fire employees. The changes in pension benefits are logical and St. Charles supported them, In fact, St. Charles and other cities, villages, and towns support all provisions of the reform bill, except one. That provision has to do with an enforcement mechanism that was ill-conceived and could have an extremely detrimental impact on city services.
This enforcement language would go into effect 1/1/15, if no other statutory alternative is enacted. It would apply if employers (cities and towns) fail to make the required pension contribution, as determined by the Illinois Department of Insurance, within 90 days of the date due and would allow the State Comptroller to deduct amounts from state funds (sales tax, income tax, telecommunications tax, etc.). Further, it would allows action in circuit court if state funds are not available.
Municipalities oppose this language for 3 main reasons:
1. We do not believe that the Department of Insurance calculations are always fair and reasonable. St. Charles typically uses its own actuary to determine the pension payments required. This has served us well for many years.
2. By allowing this type of “garnishment,” the legislation asserts that pension payments take precedence over ALL OTHER CITY SERVICES AND PROGRAMS. We simply cannot agree with this. It does not allow for extenuating circumstances or other factors to be considered. Quite frankly, the legislation determines that pension payments must be made without regard for any other obligations of the City.
3. The enforcement language was not included in the prior pension reform legislation and the public safety unions are gaining something that others do not.
In summary, the public safety unions were able to secure something that would assure that pension payments could be given precedence over all other local government expenditures. Municipalities were not prepared to agree to that. The Pension Fairness Coalition issued a statement regarding the issue – PFIC Statement HB 5873 FINAL. This letter from Ed Paesel also helps to explain.
Recent communication with state legislators regarding this matter have been promising and there is a strong belief that the matter will be taken up again in the near future. I hope that is true.
In the meantime, I encourage local residents to contact their legislators and tell them that public safety pension reform should be enacted.