Proposed Kane County budget defers pension problem

Wary of following a path that created Illinois' pension woes, a handful of Kane County Board members are taking a hard look at a plan to partially fund about $6.6 million in additional government spending by deferring payments designed to catch up with about $45 million in unfunded pension liabilities.

The county's final 2014 budget is just a couple of weeks away from a full county board vote. The plan involves increasing spending by about $6.6 million.

But there would be no increase to the county's portion of local property tax bills because the spending would be funded by a combination of increased income and a diverted portion of the tax levy that would normally fund pensions.

Last year, the county finished the year with a budget surplus. It dedicated $1.4 million from the surplus to paying down $45 million in unfunded future pension liabilities.

The plan for 2014 would not pay down any of that future pension debt. Instead, the budget would fund only pension liabilities due next year.

Finance Committee Chairman John Hoscheit was joined by county board member Cristina Castro in questioning whether that was a good idea over the long term.

“By shifting these funds, we're not whittling away at that underfunded amount,” Hoscheit said. “As a board, we really need to have a multiyear budget going forward. A significant part of this (2014) budget is balanced based on increasing revenues that may or may not project over a four- or five-year period.”

The second part of Hoscheit's comment referenced expectations for 2014 that include increased revenue flowing to the county from local sales and income taxes. That expectation is based on a five-year average that Joe Onzick, the county's new finance director, shows county officials have been too conservative in budgeting for in the past. The expectations assume a continued local and national economic recovery.

County board Chairman Chris Lauzen said county employees, retirees and local taxpayers should not worry about a pension funding problem in Kane County.

“Nobody is going to mess with the pension contribution,” Lauzen said. “We pay each year's bill. Last year, we made progress on the unfunded liability. It's within striking distance over a period of time. While I'm here, we're not going to be doing any shortchanging of that obligation. That is as real a liability as any other liability we have.”

Finance committee members agreed to the deferral on the unfunded pension obligation in 2014 for the sake of keeping the county's tax levy flat. But there are other major potential cost increases that may still rattle that flat levy commitment.

The impact of union contract negotiations on salaries is still unknown. Board members have said nonunion employees should expect similar raises to whatever union employees receive. However, every 1 percent increase in salary will add another $1 million in costs to the county's budget, not including benefit enhancements.

The county board also has not yet come to terms with Kane County Coroner Rob Russell on the budget for his office. Russell wants two new deputies to cut overtime costs. The board has so far resisted that additional staff. Russell has hired former county board attorney Ken Shepro to assist him in negotiations with Lauzen.

Lauzen may add two new employees of his own to the county payroll. He has hired two community outreach workers on a contract basis. Their jobs involve beefing up the county's social media profile and marketing the county as a place to live, work and play.

Lauzen is also promoting the creation of a “Junior Kane County Board” the outreach workers would oversee. The junior board would serve an educational function as a mock county board.

The salaries for the community outreach workers, now being paid as contractors with no benefits, would be a wash compared to the current budget. However, as employees, they would get insurance and pension benefits not available to them as contractors.