Round Lake Park may need tax hike to fund police pensions
Round Lake Park residents again could be asked to pay more in taxes as village officials try to determine how to catch up on their police pension obligations.
The tiny village is limited by the tax cap in how much it can raise for that purpose through property taxes, so the gap of what it should be paying into the pension fund and what it actually is contributing each year has continued to widen, officials say.
"We can't tax sufficiently to pay what we owe," said Village Attorney Peter Karlovics. "We're now about $240,000 per year off in our contribution."
A study group has been formed to determine what approach to take, but the choices are limited, according to Karlovics and Mayor Linda Lucassen. Either increasing property taxes or borrowing through a bond issue requires voter approval.
"If we want to put something on the ballot we have to be ready by August," Lucassen said. "We have to come up with something to pay this."
Round Lake Park's police pension fund is about 25 percent funded and would require about $7.04 million to bring it to 100 percent, said Deputy Police Chief Dan Burch, who serves as president of the pension board.
The fund covers 13 active members, four retired officers and one surviving spouse, he said. Pension boards theoretically can sue villages to uphold their fiduciary responsibility, but that is not a consideration, Burch added.
"I know the village wants to find a solution," he said. "There's not a big pile of cash sitting around that they're not giving to us."
Police pension funding has been an issue in Round Lake Park for many years, and revenue sources that may have been used to shore up the fund have not materialized. Village officials in April 2013 put the question on the ballot, but voters soundly rejected the request to raise property taxes.
Karlovics said there since has been a law change that would allow state funds the village receives for other purposes to be diverted to the police pension fund. That would result in "significant" budget cuts and affect police protection in the village, he added.
"We need voter approval whether we go for a tax-rate hike or a bond issue," Karlovics said. "We're trying to determine what's feasible and what the pluses and minuses are."
Any ballot question will involve a public awareness campaign.
"This time, we're taking a strong, strong stance," Lucassen said. "We realize and recognize we have to do something."
On the other end of the spectrum, the Vernon Hills village board just authorized a payment of $1.8 million - $234,000 more than last year - into its police pension fund for 2016-17.
Depending on the assumption regarding the rate of return on investments, the fund is either 68.5 percent (village estimate) or 82 percent (state department of insurance) funded, said Finance Director Nikki Larson.
Larson explained to trustees that each municipality controls its own police pension fund.
"If they're not funding that, ultimately they'll be in trouble at some point of they don't pay the pensions they promised to pay," she said.
Officials said a bill introduced in Springfield to pool police pensions has not gained traction.
"There's absolutely no support for that," said Police Chief Mark Fleischhauer.
Mayor Roger Byrne said one result could be that some towns have to consolidate police departments.