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posted: 12/9/2012 5:00 AM

Editorial: Clock is ticking for towns, taxpayers on another pension crisis

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The Daily Herald Editorial Board

The pension proposal for teachers and state employees offered by state Rep. Elaine Nekritz last week was, as we noted at the time, a promising if imperfect advance on a crisis that everyone in Springfield decries but all too few want to do anything serious about.

Another pension crisis, though, is having trouble generating even the tacit tongue clucks from Springfield, and it has the potential -- very soon -- to hit suburban towns and property taxpayers right between the eyes.

In short, thanks to pension changes approved for local public safety workers in the 1990s by the General Assembly, many if not most communities will soon find themselves having to choose between funding services as basic as sewers, water and road maintenance and paying for the pensions of retired police and firefighters.

For the towns most urgently facing this disaster, an unfortunate byproduct of their complaint is that it appears to pit them against some of the public servants they most appreciate and admire. They don't want this battle, and who would? Every reasonable citizen wants to acknowledge and reward a set of employees who perhaps more than any other put their lives and safety directly on the line in the service of the community.

But the question persists of how long most towns can continue to meet the retirement expectations imposed by the legislature for these employees.

Wilmette Village President Christopher Canning, who heads a coalition of town leaders trying to draw attention to their plight, says that since 1996 his village has increased its contributions to police pensions 500 percent and to firefighter pensions 800 percent, but its pension fund has fallen from 100 percent funded to just 60 percent.

"In this century, ..." he told our editorial board recently, "we put in about $28 million but our liability has increased by $40 million."

Hoffman Estates Village President William McLeod says police and fire pensions have risen to account for 10 percent of the village's operating budget. Roselle Village President Gayle Smolinski said public safety pensions now account for 25 percent of the town's $4.8 million operating budget and have been a major factor behind cuts of 15 percent of the village's workforce. Next year, she said, payments to police retirees "are going to outstrip the income" to that fund.

To a certain extent, home rule communities can deal with the problem because they can increase some taxes on their own to meet the obligations. But note that solution -- increase taxes. Non-home rule communities like Roselle have a bigger problem. They have to go to residents to get approval for any tax hikes, and if they don't get approval, the law allows the pension funds literally to dip into the public coffers and take what's owed them, moving all other community services down the priority ladder and pushing many out altogether.

To address the issue, the coalition seeks key legislative changes not unlike those that have been approved and considered for teachers. They want a higher retirement age than 50, seeking a return to the previous age-55 requirement, higher contributions from employees and significant changes in the cost-of-living standards that currently apply.

As with the teachers' situation, the specifics of each proposal can be debated, but the key for local municipalities is that the debate get under way, a serious difficulty considering that the state has a significant financial stake in the urgent teacher pension crisis and only local towns and taxpayers have a stake in this one. Nekritz and the lawmakers who joined her last week have stepped up with ideas that could address, if not entirely solve, the problem involving teachers and state employees. The real question remains now of who will step up to address the impending disaster for police and firefighter pensions -- and will it be in time?

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