Rock Island Today

Wirepoints president Ted Dabrowski is warning that a plan being pushed by East Moline officials to cover pension deficits could leave residents deeper in debt.

“The government wants to borrow a whole bunch of money for cheap, because rates are really low right now,” Dabrowski told WQAD. “If they do better with their investments, that’s good for the pension funds. But if they lose out, it’s the taxpayers who are on the hook. It’s high risk for sure.”

Dabrowski argues he doesn’t see the logic in going further into debt to pay off debt that’s already been accrued.

“We shouldn’t borrow to get out of a debt problem,” he said.

As it is, East Moline officials are proposing roughly $40 million in general obligation bonds to help cover the costs. Residents had their first chance to weigh in on the matter at a Sept. 7 public hearing held at City Hall.

"We are about $40 million in unfunded liability for both police and fire," said City Administrator Doug Maxeiner. "And the cost of funding that unfunded liability is growing almost exponentially."

With reforms to the state public works pension put in place a decade ago, city governments are now required to fund 90% of those liabilities by 2040.

In East Moline, those unfunded costs total more than $40 million for firefighters and police alone.

Meanwhile, Dabrowski argues not only would a bond not solve the issue, it only stands to ultimately only add to the burden being placed on cash-strapped residents.

"What if East Moline gets into the market at the top of the market and we're only down from there, 20-30%, and we have no idea what the market's going to do," he said, adding that a savvier course of action would be for the state to change the pension statutes to the point of making them more affordable for cities to pay and increasing the willingness of residents to stay in Illinois.

While the East Moline City Council hopes to vote on the bond proposal as soon as Sept. 20, Illinois state Rep. Dan Caulkins (R-Decatur) already knows where he stands in the debate.

“We’ve got to protect the pensions but we’ve also got to understand the taxpayers need to know they’re getting something for their money,” said Caulkins, who formerly served on the Decatur City Council. "Pension reform has got to be on the table. Now is the time because these pensions are insolvent and our people are going to suffer greatly for it."

Caulkins makes note of the state’s largest cities recently being slapped in a study with an F grade for their handling of the ongoing pension crisis. Already saddled with the worst pension debt in the country, researchers report pension debt soared by 19 percent in Illinois over the last year.

Moody’s Investors Services reports the state’s pension debt skyrocketed to $317 billion as of June 30, 2020, or more than double the state’s official estimate.

Caulkins argues things don’t have to be that way.

“We had to make very difficult decisions while I served on the council,” he said of his time on the Decatur City Council. “How do we fund the pensions; how do we fund public services? One of the things we need to think about is what are the priorities and how do we help these cities. We’ve already talked about taking their funding sources away. The governor has said he is interested taking more of that away. That’s a terrible decision.”