Homeowners in the Cook County village of Norridge could soon be looking at higher property tax bills – for reasons a growing number of Illinoisans find familiar.
On Nov. 14, Norridge trustees voted to approve a property tax levy 35.5 percent higher than the previous year’s, or to $1.6 million from just less than $1.2 million. The cause? The growing cost of the village’s police pensions and a new state law dictating the pension funding level.
Norridge Mayor James Chmura estimates most village residents will pay up to $80 more on next year’s property tax bills, according to the Norridge-Harwood Heights News.
Municipal pension funds are required to be 90 percent funded by 2040 under a state law that went into effect in January. As of 2016, Norridge had fewer than 59 cents for every dollar needed to fund its police pension, according to a 2017 report from the Illinois Department of Insurance, or DOI.
The levy hike is part of a “five-year transition plan” Norridge leaders created last year with the police pension board to meet the state’s new funding requirements. The village’s pension contribution comes exclusively from property tax revenue, according to village treasurer reports.
Norridge officials held a public hearing on the tax levy increase and presented an actuarial report prepared by accounting firm Lauterbach & Amen LLP. The report recommended the village put $1.97 million into the police pension fund, which is $370,000 more than the total property tax collection the village expects even with the 35.5-percent hike.
The firm’s analysis found the village’s police pension to be about 56 percent funded, representing a slight decrease from the funding ratio DOI reported last year.
Chmura expressed reluctance to ask more of taxpayers, according to the Norridge-Harwood Heights News. But the mayor said the village’s surest path toward funding its pension obligations is through its property tax levy. With the recent departure of major retailers such as Carson’s and Bed, Bath & Beyond, turning to sales tax revenue is an increasingly unreliable option, he said.
“There are some things we […] don’t have control over,” Chmura said, according to the Norridge-Harwood Heights News. “The pension is one of those things.”
“Unfortunately, it’s not going to get better,” he said.
Norridge is far from the first municipality to see pension costs spike the property tax levy. The small southern Illinois city of Carterville hiked its levy upwards of 30 percent – its largest in history – to keep up with rising public safety pension costs. Peoria, Rockford and Chicago all face pension crises.
In the nearby suburb of Harvey, growth in public safety pension costs has plunged the city into fiscal crisis. After failing to maintain required pension funding levels, the Illinois state comptroller intercepted $3.3 million in Harvey’s tax revenue. The suburb has sent layoff notices to dozens of police and fire employees, compromising today’s public services to pay for yesterday’s pensioners.
Defined-benefit pensions have failed both government workers and taxpayers, imperiling workers’ retirement security while tethering taxpayers to massive, unpredictable costs.
State lawmakers have the ability to reverse course, provided they’re willing to pursue the necessary reforms. 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.
Without a constitutional amendment, continual growth in unfunded pension liabilities will cast an ever-larger shadow of uncertainty over taxpayers and government workers.