Analysis: Taxpayers To Face Brunt Of Growing Illinois Public Pension Crisis

There is a growing crisis in public safety pensions in the 600 municipalities in the State of Illinois that could wreak major havoc across the state, with taxpayers taking the worst of the pain. A court order last summer in a Chicago municipality that forced already high taxes there to be hiked even more could be a sign of more to come.

There is a growing crisis in public safety pensions in the 600 municipalities in the State of Illinois that could wreak major havoc across the state, with taxpayers taking the worst of the pain. A court order last summer in a Chicago municipality that forced already high taxes there to be hiked even more could be a sign of more to come.

In short, cities and municipalities in Illinois have been shorting their share of pensions for their police and fire departments, and a 2011 state law that was finally used last year could fuel a tsunami of extreme pain for taxpayers across the state.

If current trends continue, anywhere from 200-400 Illinois municipalities could be forced to hand over the tax money they take in directly to these pensions, and then hike taxes even more to make up shortfalls. Those cities would follow the lead of Harvey, Illinois, which was forced by an Illinois court in August to raise property taxes and have its tax revenues garnished.

Harvey, one of the most impoverished cities in Cook County, already paid one of the highest property tax rates in the state's biggest county. The Chicago Tribune estimated the effective property tax rate there at 24.226% before that court order.

According to WirePoints.com, which compiled data from public pension financial reports released by the Illinois Department of Insurance, as well as data from the Illinois Comptroller, and the U.S. Census Bureau found that 180 cities in Illinois saw their finances substantially worsened between 2003 and 2016.

WirePoints provided a sample of 20 Illinois cities with populations above 25,000 where the pension crisis is already creating pressure on budgets, which includes area cities like East St. Louis, Granite City, Carbondale, and Alton.

Statewide, Wirepoints found that about 400 of Illinois' 650 municipalities did not even make the required payments to public safety pensions at all in 2016. Overall, the police and fire pensions for all Illinois counties were underfunded by more than $10 billion, with many on the verge of being broke.

In East St. Louis, funding for the police pension fell to 38% in 2016 from 42% in 2003. The fire pension dropped from 29% to 13% during the same period.

In Granite City, the pension shortfalls were greater, although not as severe as Harvey and other municipalities in the Chicago/Cook County area.

The Granite City police pension fell 11% between 2003 and 2016, from 44% funding in 2003 to 33% funding two years ago. The fire pension dropped 23%. The Granite City fire pension was only 26% funded by 2016. That accounted for an unfunded liability by the taxpayers of nearly $83 million in 2016, or $6,626 per household.

In East St. Louis, the combined unfunded liability in 2016 was $77.3 million, or $7,247 per household.

The East St. Louis police and fire pensions were also two of the most underfunded in the state in 2016, each more than 65% short on funding. The East Alton police pension was underfunded by 52%.

The pension shortfalls have come despite doubling the taxpayer contributions in 2005.

So far the pensions have been noticeably silent about the shortfalls, with the Harvey pensions being the first to take action under the 2011 law, but with the state owing more than $23 billion in benefits to police and fire employees and retirees more pensions will likely start taking their municipalities to court to get the money owed to them.

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