Bills threaten local pension budgets
Two bills recently introduced in the Illinois General Assembly threaten to destabilize the municipal public safety pension system and impose severe financial consequences on taxpayers throughout the state. While the intent is to address concerns with state pension systems, applying the proposed changes to municipal pension systems threatens to undermine the stability of these pension funds at the expense of local taxpayers.
Unlike teachers and state employees who must wait until age 67 to retire with full benefits, police officers and firefighters under Tier 2 can retire at age 55 after 30 years of service, when they will receive an annuity equal to 75% of their final earnings. For many public safety personnel, this would translate into a starting annual pension exceeding $80,000. This not only provides financial security in retirement but is also constitutionally protected.
The proposed legislation would undo critical reforms implemented in 2010 that stabilized the rapidly deteriorating state-mandated pension systems. Rolling back these reforms would leave taxpayers on the hook for increased mandatory contributions. Struggling local governments would need to impose substantial property tax hikes, find alternative revenue streams or cut other services to meet this added financial burden.
According to an analysis produced for the Commission on Government Forecasting and Accountability in June, unlike other state pension systems, Tier 2 fire and police pensions are compliant with Social Security “Safe Harbor” requirements. Undoing the progress made over the past 14 years would only serve to undermine that stability and be a tax increase on everyone who does not receive a public pension.
The Invest in Communities Coalition, representing local governments and municipal conferences across Illinois, provides valuable resources for municipalities, organizations, elected officials and residents seeking to engage on fairness in pension policies for police and fire personnel.
Rod Craig, Hanover Park Mayor and President, Northwest Municipal Conference