Seeking a solution to ballooning public safety pension obligations, the City of Peoria will ask the voters for direction.
The City Council on Tuesday approved an option to put an advisory referendum on the April 6 ballot to gauge residents’ willingness to support property tax increases to address police and fire operational and pension costs.
“We're not having this discussion because we're saying we want to raise your taxes,” said Mayor Jim Ardis, noting the vote will not impact the 2020 or 2021 budgets. “We're having this discussion to see, are we going to put something on the ballot in April to ask our constituents their opinion on whether or not we should utilize an increase in property taxes to balance our budget.”
City Manager Patrick Urich said the police and fire budgets make up 54% of the general funds.
“The police budget is $26.6 million; the fire budget is $19.8 million,” he said. “That does not include benefits; this is just the direct operating expenses.”
Additionally, a current pension fee will sunset after next year, resulting in an additional $2 million shortfall in pension funding. Urich said the city will need to transfer $8.8 million out of the general fund to cover pension expenses in 2022--up from $5.2 million next year.
Urich said the city has the option of establishing police protection and fire protection property taxes of 7.5 cents each per $100,000 of assessed valuation. Any value above that 0.075% would need voter approval; a rate of 0.1% would generate $2 million, and represent an increase of $84 annually for the average homeowner with a home valued at $125,000.
“I don't support a tax increase and I don’t think the public supports a tax increase,” said at-large Councilman Zach Oyler, who joined the majority in the 7-4 vote for the advisory referendum option. “But I see no harm in putting it to the public and allowing them to give us the opportunity of how they would like us to manage their finances, because that's really what this comes down to. This is the people's money, it's not our money.”
But Rita Ali voted against the motion, believing the non-binding referendum approach would be “an exercise in futility.”
“I don't think we need to put this on the ballot, because it's a waste of time,” said Ali, who was joined by fellow council members Chuck Grayeb, John Kelly and Jim Montelongo as dissenters. “If we've been listening, people have been already telling us, ‘We don't want higher property taxes.’ So we're asking a question, I think, that we already know the answer to.”
Ali and Grayeb said the city should consult with local state representatives about revising the mandated pension obligations.
“There's no reason in the world why we should wait until the results of a potential April referendum to start having the discussions that have been mentioned,” said Ardis, noting that only 12 cents of every property tax dollar collected in Peoria goes to the city.
While some council members hope the state legislature eventually will come through with pension relief, Kelly said “strategic discussions” are needed to determine a permanent solution.
“If we approve this, we're going to put a band-aid on our problem for another year or two, and then we're going to have the same problem again, and again, and again,” he said. “Because we have a police and fire system, including pensions, that I think we all know we cannot afford.”
Urich said the council will have input on crafting the referendum language. The deadline to place a referendum on the April ballot is Jan. 19.
Revised 2021 budget
A public hearing on the revised 2021 budget that Urich presented at last week’s special meeting drew no comments, and a planned vote on the spending plan originally targeted for Nov. 17 has been moved up one week.
But council discussion on the agenda’s budget item remained focused on 2022 pension obligations. Responding to a question from Councilman Denis Cyr, Urich detailed the city’s predicament.
“We will be paying out, in 2022, just under $16.8 million to our fire pensioners, and we will be paying out $19.8 million to our police pensioners,” said Urich, noting taxpayers would need to cover $29.25 million of those total expenses.
“We only have funds set aside that that will amount to about $20.3 million, and then we have to come up with the additional $8.8 (million) out of the general fund to make up that $29.3 (million). So that's the shortfall from what we're currently levying in taxes, and that we're going to have to make up.”
Urich went on to note the total amount the city will need to contribute through 2040 is over a billion dollars.
“If you take that off of what we're currently contributing today, that means that we have to come up with $780 million more than what we're currently contributing over the next 20 years,” he said.
In another matter, the council approved a $1.185 million set-aside for local CARES economic support payments, amending the original request of $250,000 on the agenda. The funds, which will assist between 50 and 78 businesses hurt by COVID-19 repercussions, will be reimbursed through the state’s Business Interruption Grant program.
“This would be money that would provide for eligible businesses up to $15,000 of economic support, and for hotels up to $25,000 of economic support,” said Urich, adding the money must be distributed by the end of January.
In other actions, the council:
- Approved the Peoria Township estimated tax levy of $1.27 million; treasurer Patrick Nichting noted the rate will not exceed 0.08%, the lowest in 25 years;
- Accepted the Community Development Block Grant advisory commission’s service priorities and application for 2021;
- Named the new Fire Department Station 4 at 409 Western in honor of Edward B. Gaines, the city’s first Black firefighter;
- Amended portions of the city code to allow regulation of bodywork establishments;
- Approved a contract with Resource Management Associates to administer police promotional exams;
- Approved text amendments to the city code related to parking and duplex regulations, while deferring text amendments regarding parking in form districts;
- Tabled action on a special use request for a sober living facility at 2419 N. Prospect Road.
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