Editorial | Pension woes hitting home

Editorial | Pension woes hitting home

It's Harvey and Peoria today. Who will it be tomorrow?

The public-pension crisis in Illinois — a largely theoretical issue to many people — is becoming more and more real in communities across the state.

Just a few months ago, it was Harvey that laid off police officers and firefighters to keep up with its budget- and pension-related woes.

Now, it's Peoria, where the newspaper there recently reported that "the Peoria City Council heard a staff proposal to close city hall every other Monday starting in July, require 218 city employees to give up 12 days without pay through the end of the year and institute rolling layoffs in the city's public works department."

The problem in Peoria — as in dozens of other communities around Illinois as well as in state government itself — is that there is not enough tax revenue to pay both the ballooning costs of public pensions as well as traditional services.

To cover pension costs, municipal officials feel they have no choice but to make sacrifices elsewhere.

Peoria's budget problems are being driven by a toxic mix — "a decline in population — down from 116,400 in 2013 to 112,800 in 2017 — a decline in sales-tax revenue and the fact that 85 percent of property-tax money now goes to pay city pensioners."

Property-tax bases rise and fall, as do sales-tax revenues. But the fact that Peoria is now spending 85 percent of its property-tax revenue on pensions and just 15 percent on a vast array of municipal services is a stunner.

The ratio ought to be the reverse.

What will the "What, me worry?" members of the Illinois General Assembly think about this cataclysm, one that will spread from city to city? That's the question city council members are asking.

The regrettable answer is that some members of the House and Senate will never think about or understand the problem because it's not one of their concerns. They're in Springfield to collect a generous paycheck, build a lavish legislative pension and vote the way party leaders tell them to vote.

Many of the rest understand this growing dilemma but, at least for now, have no interest in making the tough decisions to fix it, assuming it can be fixed.

This problem is overwhelming municipalities because underfunding of pensions in past years requires huge payments in this and coming years to catch up.

The impact it is having on Peoria's budget demonstrates how quickly this conflagration can consume taxpayer dollars.

The Journal-Star reports that city officials intended to build up a cash reserve fund that had fallen to $3.5 million.

This year, city officials preparing the city's 2018 budget had planned to add $2 million to its reserves.

Instead, "we're looking at a $1.5 million deficit in the general fund instead of a $2 million addition," said City Manager Patrick Urich.

The proposed furloughs do not include public-safety and emergency responders. But how long will it be before that city's growing financial emergency does affect them?

What then?

The irresistible force is hitting the immovable object. Just as the state is effectively bankrupt, municipalities throughout Illinois will be confronting that unfortunate reality.

Solutions must include a restructuring of government at all levels in ways that increase efficiency as well as the implementation of spending controls that ensure these kinds of problems do not recur. Even though the state recently increased the state income tax, and our property taxes are among the highest in the country, some elected officials are now calling and will call for more of the same.

It's tempting to say that Peoria's problems represent the canary in the coal mine. But the canary checked out a long time ago. Peoria represents a coal miner succumbing to a financial threat too long ignored.

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