Pensions loom large on budget talks

Updated: November 12, 2012 6:07AM

WINNETKA — As pension obligations continue to rise, the Village Council hopes to finding solutions to the problem rather than continuing to pass the buck to the residents.

To get a jump on setting the 2012 property tax levy, the Winnetka Village Council began discussions at their Oct. 2 meeting, two full months before it must be adopted.

The introduction was meant to give staff a direction of where to set the levy.

“The village doesn’t really have a lot of sales tax (revenue),” said Winnetka Finance Director Ed McKee. “We rely heavily on property tax. It’s a stable sort of revenue for the village.”

According to McKee, the village’s share of the local property tax bill has decreased 22.5 percent, from 17.23 percent in 1997 to 13.36 percent today. The reduction is mostly due to a decrease in village employees, down from 178 in 1989 to 154 today.

McKee said, at the recommended 1.7 percent increase, a Winnetka homeowner with a $20,000 property tax bill can expect to pay $45 more in property taxes.

The village’s agenda packet claims Winnetka receives 13.36 cents from every property tax dollar paid. Their data states the Winnetka Public Schools receives 39.70 cents while New Trier High School gets 23.89 cents per dollar in property taxes.

The discussion quickly turned to rising pension costs not only for Winnetka, but every municipality in Illinois. As the state continues to toss around pension reform in Springfield, trustees are looking at their own future pension obligations.

“These pension costs are out of control and it’s not sustainable,” Trustee Jack Buck said, adding that contracting out employees would be one way to combat rising pension costs. “It’s the biggest issue facing every community. Why can’t Winnetka set an example? One way to stop it is stop paying pensions.”

According to the village’s March 31 comprehensive annual financial report, the village’s current pension plans are 62 percent funded and would need an additional $35.08 million to reach 100 percent funded status.

The village funds pensions for the police and fire departments and the Illinois Municipal Retirement Fund, which covers all non-sworn police and fire personnel.

Village president Jessica Tucker felt more discussion would be needed as the tax levy adoption date draws near. One suggestion was a finance committee, which includes a couple of trustees, to meet and look into the growing costs.

“It’s an awful problem,” Tucker said. “How do you ever analyze and put away enough money for those types of benefits? This number is a big number. What can we do on the expense side to keep that down so we don’t have to keep raising property taxes and fees to cover these never-ending costs?”

The council seemed pleased with the tentative levy number, but knows tough choices lay ahead.

“When I look at all of this and all of the concerns, comments and issues and at the end of the day you’re (only) asking for a 1.7 percent increase it’s remarkable,” Tucker said. “It’s remarkable for all the services we provide as a village. We appreciate the wonderful service we’re getting, but there is a cost. It’s a tough balance.”

The property tax levy ordinances must be filled by the last Tuesday in December. The levy will be discussed again at the Nov. 20 council meeting and is expected to be adopted Dec. 4.

“The point here is getting it early and looking at the data,” said Winnetka Village Manager Rob Bahan. “There is flexibility in the schedule before it needs to be filed.”

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