Geneseo, other Illinois municipalities face tax hikes to fund pensions, IPI reports
The City of Geneseo is not the only municipality to steeply hike it's property tax to meet its law enforcement pension crisis, and more cities face the same stark choice, a Chicago-based think tank said in a recent report.
"Like many Illinois communities, Geneseo is grappling with the state's pension funding requirements," Illinois Policy Institute (IPI) said in a report issued Nov. 30. "Municipal pension funds are required to be 90 percent funded by 2040 under a state law that went into effect in January."
On Nov. 13, aldermen for the Henry County town 20 miles east of the Quad Cities set Geneseo's maximum property tax levy for 2019 payable taxes at almost $1.2 million, amounting to a 9.99 percent increase over the last payable tax year. The increase aims to meet a state mandate for all Illinois municipalities to fund law enforcement pensions at 90 percent by 2040.
Geneseo, which bills itself as "a city with heart," had some catching up to do as it's law enforcement pension had been funded at 53 percent in 2017. That was an increase over the 47.7 percent funded the previous year but was down slightly from 56 percent in 2015, according to figures from the Illinois State Comptroller's office that were cited in the IPI report.
The IPI report also cited figures published in the Dispatch-Argus about auditors recommendations that Geneseo increase the law enforcement pension portion of its property tax levy to $473,928 from $388,512. Those auditors projected that Geneseo will need $497,000 for pensions next year and $521,000 the following year, the IPI reported.
Geneseo, with a population of about 6,500, "is far from the first municipality" to spike its property tax levy, the IPI said. Carterville in Williamson County increased its levy to about 30 percent, the largest property tax hike in Carterville history, to cover rising public safety pension costs, while Norridge, Peoria, Rockford and Chicago continue to face pensions crises, the IPI reported.
"Defined-benefit pensions have failed both government workers and taxpayers, imperiling workers' retirement security while tethering taxpayers to massive, unpredictable costs," the IPI report said.
The solution lies with state lawmakers, "provided they’re willing to pursue the necessary reforms," the IPI report said.
"Lawmakers in Springfield must amend the Illinois Constitution to allow for changes to the growth in future, not-yet-earned pension benefits – while protecting benefits already earned—to enable municipalities to regain control over their finances," the IPI report continued. "Without a constitutional amendment, continual growth in unfunded pension liabilities will cast an ever-larger shadow of uncertainty over taxpayers and government workers."