Rising pension costs to test Schaumburg's ability to keep tax levy pledge

Since 2009, Schaumburg officials have kept a promise not to increase the property tax levy they established that year because of the economic recession.

But they will soon face a dilemma when it comes to that pledge, due to rising police and firefighter pension costs that within a few years could consume the entire levy.

It's an issue municipalities across the suburbs are facing, as they face a state deadline to make their police and firefighter pensions 90% funded by 2040.

"Pensions are absorbing everyone's budgets more and more," Schaumburg Mayor Tom Dailly said.

Schaumburg trustees in December are expected to approve a levy of $19.5 million - the same it's been since a 5% reduction in 2019.

That will fund a portion of police and fire operations as well as next year's police and fire pension contributions.

Village staff projects that after 2026, other revenue sources will be able to cover public safety operations.

However, by then the village will need $19.5 million for pension contributions alone. And those costs are expected to continue to rise.

Dailly said there's some hope for a 10-year extension on the state's 2040 deadline, due to the hardships many are facing.

That current deadline, and the fact some police officers and firefighters can now retire with full benefits at 50 years old, is driving rising pension costs, he added.

A common response to concerns about the costs is that local governments can come up with the money through their property tax levies, Dailly said.

In Schaumburg, any dilemma about raising the levy for that reason is still a few years off and Finance Director Lisa Petersen has recommended keeping the amount steady for 2023.

Even so, $2.3 million of reserves were used to shore up police and pension fund contributions for the current year and another $4.3 million from reserves is recommended to be used for that purpose next year.

"I think we always approach the annual tax levy very carefully and very thoughtfully," Petersen said. "There are so many things up in the air when it comes to pensions. We want to try to keep the levy flat while these questions are answered."

With the recommendation of its finance committee, the village board is scheduled to approve the tentative levy on Nov. 7 and the final amount on Dec. 12.