Villages to pay for teacher pensions?
SPRINGFIELD -- Municipal leaders are pushing back against a proposal in Springfield that would have villages, townships and other local governments give up some of their tax revenues for teachers' pensions.
Illinois House Speaker Michael Madigan filed that proposal and others this week. They could be debated as early as today.
A proposal by Democratic Illinois House Speaker Michael Madigan would divert personal property replacement tax revenue from local towns, schools and other taxing bodies to pay for teacher pensions.
Personal property replacement tax: Set up in 1979 when a new Illinois Constitution abolished business personal property taxes levied by local governments.
Who pays?: Corporations, partnerships, trusts and utilities pay the state, which distributes funds to local taxing bodies.
Total collected: $1.4 billion statewide in 2011
Source: Illinois Municipal League
Under the plan, villages and other governments outside Chicago would be hit for about $982 million a year to help cover teacher pensions.
Another proposal would have local schools statewide lose about $536 million in tax income with the money going to pay for teacher pensions. And a third proposal would include Chicago among the governments that would lose some tax revenue to cover pension expenses.
It's unclear so far which choice Madigan wants to go forward with or whether the proposals "are part of a broader tactical objective to achieve some other effort," said Illinois Municipal League spokesman Joe McCoy.
McCoy said any of the options could be devastating to local governments, which he said shouldn't be asked to pay for teacher pensions.
"This money is critical for local operations," he said.
Madigan spokesman Steve Brown, though, said the state can't afford to pay for the pension costs of people like teachers who never work directly for the state. He said local school officials have protested proposals to use standard property taxes to help cover retirement costs, so Madigan presented other options.
"The goal is to first recognize that the state can no longer pay for the pensions of nonstate employees," Brown said.
All of the proposals would take away most of an obscure tax -- the corporate personal property replacement tax -- that is collected by the state and distributed to local governments including villages, townships and schools.
Arlington Heights, for example, could lose $464,308 under the plan, according to Illinois Municipal League numbers. Elgin could lose $1,210,148, Libertyville $103,511 and Naperville $446,655.
Barrington Unit District 220 could lose $867,493 this year from the tax, Northwest Suburban High School District 214 could lose $7,412,484 and Glen Ellyn Elementary District 41 $1,084,376.
State Rep. Elaine Nekritz, a Northbrook Democrat and pensions negotiator, said Madigan's idea, coming nearly a month after Gov. Pat Quinn released his pension proposal, is a new one.
"It's not something that's been specifically discussed as part of the pension debate," she said.
Top Illinois Democrats have argued for months that suburban schools should be more responsible for paying teachers' pensions because local officials set salaries on which pensions are based. Chicago schools already handle teacher retirements themselves, they point out.
Republicans have largely opposed that idea and didn't seem interested in Madigan's proposals, either.
"I think they're terrible ideas for the collar counties and downstate," said state Rep. Dennis Reboletti, an Elmhurst Republican.
"This is the first shot that's been fired," he said.
Gov. Pat Quinn has proposed major pension benefit cuts for teachers and state employees but hasn't detailed how he'd want to shift costs from the state to local schools.
Quinn spokeswoman Brooke Anderson didn't weigh in on Madigan's plan.
"We're reviewing it," she said.
The state is looking for ways to decrease its skyrocketing retirement costs, which leave less money in the state budget for other needs. Negotiations about benefit cuts for teachers and state workers, as well as proposals to shift more pension responsibilities to local governments, will continue this week.
How those negotiations will end up remains a focus of lawmakers.
"Things are very fluid," Nekritz said.
Lawmakers' budget deadline is May 31.