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 The Normal Town Council approved a
measure Dec. 4 to raise the city’s property tax levy by $13 million, which
amounts to an estimated 5.9 percent hike in Normal residents’ property taxes
next year.
The owner of a $165,000 home in Normal would pay $816 to Normal in 2018, an
increase of $40, according to the Pantagraph.
The Normal Town Council voted unanimously in favor of the levy increase. As is
increasingly the case throughout the state, the purpose of the Normal tax hike
is to pay for the rising costs of local police and fire pensions.
Though there was noted public opposition to the increase, the Town Council said
it had no other choice but to keep up with pension costs.
 While this vote is going to hurt Normal homeowners, it’s not an unexpected
outcome. Increasing property tax bills are nothing new for Normal residents.
Property taxes have been going up in the central Illinois city annually since
2006.
And unfortunately, it’s not likely this new money will solve the underlying
problem.
Despite increases in funding, Normal’s fire and police pension funds are
actually worse off currently then they were five years ago. From 2012 to 2016,
taxpayer contributions to the Normal police pension fund increased by nearly 30
percent, and over the same period, taxpayer contributions to the Normal fire
pension fund increased by nearly 17 percent.
But in 2016, Normal’s police pension fund was only 52 percent funded, even
though it was 55 percent funded in 2012.
The Normal fire pension fund is little better. In 2016, the fire pension fund
was only 56 percent funded, while in 2012 it was 57 percent funded.
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Had either fund been in
the private sector, it would’ve been declared bankrupt years ago.
This persistent problem
underscores the need for state lawmakers to protect homeowners from
skyrocketing property tax bills. Passing a property tax freeze on
homeowners’ actual bills (not just the levies of local governments),
and requiring voter approval for property tax hikes are two powerful
reforms that would go a long way for families struggling to pay
higher property taxes as their own incomes stagnate.
Normal residents are right to be angry at rising local pension
costs. It’s a growing problem across the state. Local pension debt
in Illinois rose to nearly $57 billion in 2016, up from $38 billion
in 2010.
One fix for municipalities such as Normal going forward would be to
institute 401(k)-style plans for new workers. They could be modeled
on the 401(k)-style option for state university workers. The plan
has been operating for nearly two decades, and more than 20,000
university workers have opted out of the traditional pension plan in
favor of the 401(k)-style plan.
However, this could not be done by Normal alone. Currently, the
state does not allow municipalities to offer 401(k)-style plans to
municipal police and professional fire departments. Illinois law
mandates municipalities set up traditional police and fire pension
funds. And because of the Illinois Constitution’s pension protection
clause, once a pension is promised, taxpayers are on the hook for
that money in perpetuity.
As long as the state refuses to offer homeowners any real property
tax protection, and fails to empower cities like Normal to truly
reform their own pensions, Normal residents should expect more tax
hikes.
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