For Municipal Pensions, the Can Has Reached the End of the Road
“We shall walk with a walk that is measured and slow,
And watch where the chalk-white arrows go
To the place where the sidewalk ends.”
-Shel Silverstein “Where the Sidewalk Ends”
In 2014, Kevin Williamson used this as the title of an article he wrote for National Review, in which he describes driving from Pat Quinn’s hometown of Hinsdale, “where it’s easy to be optimistic”, down Route 55 (“the dyspeptic alimentary canal of Illinois”) to East St. Louis, where the rubber of sclerotic and unserious government meets the road of unintended consequences affecting real people. The saddest thing about the article is that, looking four years back in the rear view mirror, nothing has changed. Nothing, that is, except that now it appears that Illinois has finally reached the end of the sidewalk.
While I’ve been pointing out for years that the State’s 5 pension systems are headed for insolvency (the General Assembly’s pension plan is less than 14% funded), this particular crisis revolves around municipal pensions, particularly police and fire pensions. In August, a state appellate court ruled that as a matter of law, the City of Harvey’s firefighters’ pension fund had actually reached the point of constitutional impairment. This is the first time a court has made this determination on any governmental pension fund, and it opens up a whole new can of worms.
That’s because in 2015 a statute went into effect giving the Illinois Comptroller the authority to make up for any town or county’s delinquent pension payments by seizing its share of sales, excise, and other taxes collected by the state, collectively known as its “Local Government Distributive Fund” (LGDF).
This month, Public Act 99-8 fully kicked in. It says in pertinent part:
If a participating municipality fails to transmit to the fund contributions required of it under this Article for more than 90 days after the payment of those contributions is due, the fund may, after giving notice to the municipality, certify to the State Comptroller the amounts of the delinquent payments in accordance with any applicable rules of the Comptroller, and the Comptroller must…deduct and remit to deposit into the fund the certified amounts or a portion of those amounts from the following proportions of payments grants of State funds to the municipality:
(3) in fiscal year 2018 and each fiscal year thereafter, the total amount of any payments grants of State funds to the municipality. (emphasis mine)
Municipalities across Illinois are now confronted with the choice of cutting essential services or raising taxes to avoid having their pension contributions certified as delinquent, thus risking the loss of millions in LGDF funds:
- In Mattoon, where pension bills are half a million dollars higher than last year, ambulance services are being eliminated.
- Springfield’s City Council acknowledged the growing pension costs could mean the city will have to cut services or raise taxes.
- Normal will raise property taxes to fund pension increases
- Danville has instituted a “public safety pension fee,” which will cost residents up to $267 annually.
- East St. Louis, which depends almost exclusively on the LGDF for its entire budget, could see it totally confiscated to pay pension obligations.
During the upcoming session we’re going to see legislators tying themselves into knots to mitigate the change in Federal tax deductions with goofy schemes to create charitable deductions in exchange for state tax credits or property tax abatements, or invoking in loco parentis authority to ban tackle football for kids under 12. But at no time will we have an adult conversation about what’s about to be dumped upon thousands of unsuspecting citizens of Illinois.
Kevin finishes his piece this way:
“Driving though East St. Louis, you’ll see a dozen signs reading: “Casino — this way!” But you won’t see any pointing the way to jobs, prosperity, basic physical safety, or hope. Nor will you see them in Joliet, Carbondale, Rockford . . .”
And between now and May, you certainly won’t see them in Springfield.