Facing escalating obligations to police and fire pensions, Peoria city leaders want residents to give direction on a course of action.
The City Council spent close to 90 minutes during Tuesday’s meeting discussing a plan to place an advisory referendum on the February ballot to gauge interest in implementing Police Protection and Fire Protection taxes.
“By 2023, one out of every nine dollars that you collect in the general fund will be going to cover public safety pension costs – over and above the property tax levies we’re currently showing,” said City Manager Patrick Urich, showing a general fund transfer requirement growing from $4 million this year to $10.6 million.
“This is what’s driving us to cut services. This is the structural imbalance that we’re facing.”
Illinois law requires pensions to be 90% funded by 2040 and Peoria currently has $340 million in unfunded obligations. Urich said the amount of property tax revenue going toward the city’s general fund for operations has steadily decreased all the way down to nothing.
“There are no property tax dollars that you’re levying that are supporting the general fund operations for public safety, for public works, for community development, or for city hall – zero,” said Urich. He also noted that nearly 85% of the tax levy is covering pension costs.
Adopting two protection taxes of 7.5 cents per $100 in assessed value would generate about $1.2 million apiece. Urich said the council has the authority to implement taxes at that rate without a referendum, but the rates could be increased up to 0.6% with a referendum.
“We as a council didn’t come up with a different solution to how we were going to get through this dramatic impact that COVID-19 has had on our budget this year,” said Mayor Jim Ardis, noting the city had a balanced budget before the pandemic struck.
“We were actually putting money back into reserves for this year. All economic indicators were on fire. … We’ve been having these discussions since April: ‘How do we get ourselves out of this?’”
While the council members seemed to favor asking residents to vote on what to do, most indicated they are opposed to higher taxes.
“I don’t believe that a tax increase is a solution to any of our issues. I have communicated multiple times during budget discussions that we are on a financial death spiral,” said council member Zach Oyler. “The very idea of a tax increase makes me want to fall out of my chair because we can’t afford it, the citizens can’t afford it.”
Rita Ali said she also was concerned with the referendum approach, saying it would be “dead on arrival.” Council member John Kelly said new taxes would only drive more residents out of the city, compounding the problem.
“We must not keep doing the same things. These same things don’t work,” said Kelly. “We need to embark on a program of real growth; that’s the only way out of this stuff.”
The council unanimously voted to bring the referendum proposal back for additional discussion in 30 days.
Capital expense freeze
Acting on Oyler’s motion from last week’s special meeting, the council voted 9-2 in favor of an amended measure to freeze most unfunded capital expenses from 2019 and 2020. Oyler excluded payments on outstanding invoices on work performed to date, storm water utility projects with a dedicated funding source, design work on road construction projects, and grant funding requiring the city to meet contractual obligations.
Urich said pausing the expenses for about 110 days would allow the city to preserve about $8 million in cash flow to get through the end of the year. He said road projects on Glen, Sheridan and Western would not be delayed.
“For this time period now, for this next three months and 20 days, we could hold off on some of these projects and the city will survive and it will help us from a cash perspective,” said Urich, noting the freeze primarily affects equipment purchases and facility upgrades.
Denise Moore and Chuck Grayeb voted against the plan, citing a need for additional specifics on which expenses would be delayed.
“We are burning cash, I don’t know how many times we need to talk about it,” Ardis said in justifying the freeze. “We are burning cash every day we have this discussion and every day we say, ‘Let’s talk about it in two weeks.’”
Ardis then stressed that Urich indicated the freeze would not prohibit the city from being able to operate.
“The manager said it would help conserve cash,” he said. “We know this is an emergency situation. We’re not cutting anything. We’re delaying; we’re conserving cash.”
Grayeb suggested the possibility of doubling the $10 million in short-term borrowing the council approved last week in an attempt to save the two Fire Department engines that would be cut. Urich said the borrowing would need a repayment source, but anything more than an extra $10 million would likely require a property tax increase.
The council decided to revisit the possibility at the next meeting.
Ardis said he and Urich spoke earlier in the day with Peoria City/County Public Health Administrator Monica Hendrickson and noted that the community is “not tracking the right direction” in regard to the COVID-19 positivity rate of “right around 8%.”
“We are looking at potentially going to have some mitigation efforts placed on this region,” said Ardis. “There have already been two regions in the state that have been required to move back some of their timings and opportunities for bars and restaurants to serve, as well as some other measures in terms congregating both indoors and outdoors.”
He said while most local restaurants and the majority of bars have done a good job adhering to social distancing efforts, capacity limits and the state’s mask mandate.
“But bars are posing a big problem, both in some locations in our region and definitely statewide,” said Ardis. “The more opportunities for college students, the higher the opportunities have been to increase the transmission.”
Ardis said health officials are discouraging large gatherings such as off-campus parties, recommending people who are sick to stay home, and encouraging more people to get tested for the virus to lower the positivity rate.
“Without calling out any other communities within our region, Peoria is doing pretty good,” said Ardis, who went on to warn that businesses may not be able to withstand another shutdown.
“Our restaurants are doing a great job, but they cannot survive at this level,” he said. “They’re getting by, but they can’t survive; we need to keep them open. A majority of our bars are doing a good job, too … a few bad apples are making it bad for everyone.
“We cannot take that step back; our businesses just can’t support it.”
In other action, the council deferred amending the city code pertaining to body work establishments such as massage parlors. Salons and shops with valid state registrations will no longer need a city license to provide massages. It also deferred action on a special use massage parlor permit for Relax Massage Center at 4241 N. Boulevard Ave.
The council also received and filed a first reading of code changes related to nuisance properties, fair housing and other building regulations that were agreed to as part of the city’s lawsuit settlement with Hope Fair Housing.
During the citizens’ address portion of the meeting, City Clerk Beth Ball spent more than 45 minutes reading numerous emailed comments related to last week’s razing of the Renaissance Park Community Garden.
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