Peoria City Council ends public safety pension fee, debates alternative ways to fund liability

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PEORIA, Ill. (WMBD) — The topic of the city’s obligation to fund its public safety pensions dominated the better part of the discussions during Tuesday night’s Peoria City Council meeting.

Council members voted, 9-2, not to extend its parcel public safety pension fee that’s expected to end this year. Chuck Grayeb (Second District Councilman) and Denise Jackson (First District Councilwoman) were the only two who voted to extend the fee.

The council originally voted to enact the three-year public safety pension fee in 2018 and the city’s property owners have been paying it since 2019.

Tim Riggenbach, Third District Councilman, said the fee was only supposed to last three years with the assumption the city would find a better alternative source of revenue to pay for police and fire pensions.

Although the city hasn’t found a concrete replacement for the fee, many council members still felt eliminating this fee would take the weight off of the property owners who’ve been paying it.

“I think that the residents of Peoria have spoken up pretty loudly that this is something that should be included in our traditional budget and not as an extra fee that they are seeing on their properties,” Sid Ruckriegel, At-Large Councilman, said.

Beth Jensen, At-Large Councilwoman, said she was against the fee in 2018 and once again proposed finding other revenue sources to pay for the city’s pension obligations.

Patrick Urich, city manager, said by eliminating this fee, the city now has to find $2 million of additional revenue to contribute towards pensions. He said the city has 19 years, until 2040, to pay about $360 million of its $400 million pension obligation.

“Pensions are growing at a clip of about 6% a year and that’s just so we get to a point where we possibly can catch up with where we need to be,” Urich said.

Urich said the city should be contributing close to $40 million a year towards pensions and it’s currently contributing around $27 million.

He said without other sources of income, the city will have to pull from its existing revenue sources.

Grayeb said he thinks eliminating this fee was a mistake and said it’s a gateway to cutting “core basic services.”

“You punch a hole in this budget of $2 million dollars and that means the ramifications would go directly to public safety,” Grayeb said. “What we’re doing tonight is setting this city on a collision course to have to make draconian cuts to public safety.”

“The public said earlier this year ‘no more taxes and fees to fund pensions,” Zach Oyler, At-Large Councilman, said. “Putting this $2 million fee in didn’t help the pension problem, the pension problem actually grew during the same period of time and all this did was help take the eye off the ball for the actual problem.”

After the vote, council members went into the 2022-2023 budget discussion and debated ways to make up for eliminating the pension fee.

Urich recommended reducing police and fire pension contributions and setting aside $1.9 million of the 2021 fund balance to pay for pension obligations in 2022 and 2023. He said this recommendation wouldn’t affect staffing.

This recommendation ultimately failed in a 5-5 vote with 1 abstention.

Mayor Rita Ali, Andre Allen (Fourth District Councilman), Jackson, Grayeb, and Jensen all voted in favor. Denis Cyr (Fifth District Councilman), John Kelly (At-Large Councilman) Oyler, Ruckriegel, and Riggenbach all voted against it. Kiran Velpula (At-Large Councilman) abstained.

Riggenbach said the council could possibly revisit that recommendation at a later date but said he felt it was too early to vote on that option without a proper discussion. He also said he didn’t think reducing the amount the city is paying towards pensions would be the best financial decision.

Mayor Ali said this option may be one of the city’s only choices considering its pension situation.

“We have a broken pension system throughout the state of Illinois, we’re not the only ones that are experiencing these huge liabilities,” Ali said. “Under the current structure we have, we’ll never catch up, not in our lifetimes.”

“The only choices that we have right now until we can work with Springfield to fix the broken system is those bandaid approaches, those short-term strategies because we’re in a survival mode.”

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