In January of 1776 Thomas Paine published a pamphlet titled “Common Sense.” In it, Paine advocated for the cause of what later that year became the American Revolution. Originally, Paine published “Common Sense” anonymously. And so it is that I come to my fellow residents of Normal as a concerned citizen and taxpayer with a burden to awaken people to the seriousness of an impending financial crisis in Normal, Illinois.
Specifically, I want to address the seriousness of our public pensions. This is the elephant in the room in our state legislature, but it also affects us locally. Here’s how.
The Normal City Council has raised property taxes 11 years in a row in order to fund our police and fire pensions. Instead of budgeting for these payments at the beginning of the year, the Normal City Council has turned to a tax levy at the end of the year as the most elastic source of funding available. In other words, they can spend money foolishly all year long and when it’s time to make pension payments, they do so by raising a property tax levy.
The State of Illinois has mandated that public pensions be funded to at least 90% by year 2040. The Normal City Council has made it their goal to have pensions funded at 100% by year 2040. To accomplish this goal, Normal property owners have been hit with a property tax increase every year for the last 11 years. If we continue down this path we have 22 more years of tax increases in order to reach full funding by 2040. The lunacy of this should be evident to us all. We’ll be taxed out of our homes if this continues. Sadly, it shows no sign of stopping.
Objections to the present funding of Normal City Pensions:
-There is a common misconception in our community that there is no other way to fund pensions apart from a property tax levy. Some Council members have gone as far as to read state statutes at Council meetings implying they have no other choice but to raise taxes. Let’s be clear. This is a decision this Council has made on how to fund pensions. It is not a state law. There is nothing in state statute that would prevent pensions from being funded through the general fund or any other available revenue stream. These matters are up to Council members to decide and they have opted for a tax increase 11 consecutive years.
-In spite of increasing taxes 11 years in a row, our pensions are severely underfunded. According to the Comprehensive Annual Financial Report for the City of Normal that Andrew Huhn presented at Tuesday night’s Council meeting, our police pension is funded at 53.41% and our fire pension is funded at 57.43%. But, these troubling figures were not presented Tuesday night. Instead Pantagraph reporter Derek Beigh offered this gloss of the problem in Wednesday’s paper: “the hikes are working, with both police and fire pensions closer to being fully funded than they were a year ago. The town hopes to reach 100 percent funding by 2040.”
Who do they think they’re fooling? The fire pension is only up 1.9% from last year and the police pension is only up 1.65% from the same year. And, that’s with a 6.38 increase to the property tax levy at the end of 2017. Under, this present trajectory Normal might reach close to 90% funding by 2040, but you’ll be taxed out of your home before they get there. But more, troubling is these figures do not include declining property values, more people entering the pension system, a lack of reforms by the state and the increasing problem of out migration in the state of Illinois. It’s a recipe for an economic disaster.
-Normal residents should find no consolation that our tax levy is lower than eight other downstate comparable communities in Illinois. This is the standard talking point we hear from Normal City officials and the Pantagraph is all too eager to repeat it. Yet, we’re still talking all things Illinois where it is a fact we pay some of the highest property taxes in the nation. What should matter to us is not what the tax levy is in Decatur or Peoria, but what it is in communities where people from Normal are actually moving. We’re talking here about locally based companies who are growing jobs out of state. Places like Dunwoody, Georgia, Richardson, Texas or Tempe, Arizona. No doubt people in Normal know people who have moved to all three places in the last year alone. Those of us left behind are stuck paying higher taxes.
When Normal residents live with the lingering threat of a property tax increase each year, our city representatives are not making our community an affordable place to live. Higher property taxes discourage economic development in our community. Most new businesses who consider coming want some type of a tax rebate incentive up front. Our city leaders don’t seem to understand that companies ask because our taxes are too high. But, what about “Normal Joe taxpayer?” What type of relief does he get?
Illinois faces an impending financial crisis that is driven largely by our looming pension debt. Reversing this problem will ultimately require changing the Illinois State Constitution to enact the needed reforms. Don’t count on that happening anytime soon.
In the meantime, Normal is going to have to tighten its belt and get serious about paying down their pension debt by some other means than a yearly burden on the back of property owners.
The money is there, Normal City officials choose to spend it foolishly. May Common Sense prevail.