Pension pressures leave city with ‘nowhere left to cut,’ budget director says

Illinois Capitol News

Pension Pressure: How rising pension costs threaten public safety as cities shrink police, fire staffing levels

SPRINGFIELD, Ill. (WCIA) — The state’s capital city faces a looming fiscal dilemma that threatens to further diminish current public safety and core government services.

Even as the city of Springfield’s population continues to shrink, the cost of mandatory pension payments continues to swell.

“It is going up a lot,” Budget Director Bill McCarty says. “I mean we are talking roughly $1 million, give or take a year, each and every year. That money has got to come from somewhere. So you either raise taxes or you have to make cuts.”

In 1995, city taxpayers were paying $1,500,979 into a fire pension fund that was 90.6% funded. in 2018, Springfield paid $11,184,141 into the same fund that now sits at 45.9% funded.

The Springfield police pension fund was 78.5% funded in 1995 when the city was contributing $1,650,000 into it. In 2018, the same fund declined to a funding level of 55.1% while the city’s contribution ballooned to $10,116,706.

City officials have already voted to raise the sales tax, telecommunications tax, and the hotel-motel tax in recent years to boost city revenues, while it also cut back on the number of police officers on the force and reduced tree limb and branch pickup services in an effort to cut back on overhead expenses.

“You’re looking at diminishing services,” McCarty says. “We used to have 281 sworn police officers, now we have 249. We don’t believe the streets are any less safe, but it certainly makes it more challenging when you have fewer individuals working to keep the streets safe, and that is what you have to deal with now. You have to deal with that because we can’t afford to have 281 officers anymore because we don’t have the resources.”

After a painful combination of staffing cuts and tax hikes, the city’s last remaining option could be to cut back on public safety services, McCarty says.

“There is nowhere left to cut unless you get into the ‘sacred cows,’ which will be police and fire,” he predicted.

A recent city analysis found that one anonymous Springfield firefighter with 20 years and five months of experience in the department contributed $142,031 to his pension fund, and is slated to receive an estimated $2.57 million in pension benefits if he lives until the average age of 82.

Another firefighter with similar career experience is on schedule to collect an estimated $2.53 million in projected pension benefits after paying a total of $129,819 in personal contributions.

The remainder of that cost is either picked up by taxpayers or offset by investment returns, much of which would normally compound over time.

“It is nice to know that security blanket is there, that you have that pension available,” Springfield’s Fire Chief Allen Reyne says. “Because this is not one of those jobs that you can do into your 60’s and 70’s. It’s a very labor-intensive job.”

While firefighters don’t sign up to run into burning buildings just so they can collect a pension, Reyne says he and his crew appreciate a state that protects their retirement in its Constitution.

“As you get closer to the end of your career, it is nice to know that retirement security is there,” he said.

Reyne says “the city has maintained 12 stations, 12 front line engines, three truck companies, two battalion chiefs” over the years, although the city council did recently consider shuttering one station, which would have resulted in laying off approximately nine firefighters and potentially complicated or worsened response times.

The city’s police department has already seen the beginning of those cutbacks, although not to the severe levels some other cities have taken.

“We’re not yet closing firehouses,” McCarty says. “We’re not yet taking dire actions like laying off half of our police force.”

He predicts taxpayers will only put up with diminishing services and higher taxes for so long before some start to pack up and move away.

“They want their limbs picked up,” he said. “They want their streets fixed. They want police out there patrolling. They want public works out there taking care of and picking up waste and everything else.

“We have less resources to put into those services because they are going elsewhere, primarily police and fire pensions.”

“This is government,” he said. “And government means we need to be providing services today. We can’t do that if we’re shoveling all this money into the pension funds.”

While McCarty paints a dire picture in the future, he still expressed optimism that there is a window of opportunity for state and local leaders to take action and find solutions that could prevent drastic measures.

“Not everybody is retiring tomorrow and the city is not closing tomorrow,” he said. “Springfield certainly has its share of financial troubles when it comes to escalating tensions, but in the grand scheme of things, we are better off than a lot of other communities around.”

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