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 The Schaumburg village board could cut its property tax levy
for the first time in five years at its upcoming Nov. 13 meeting. But as the
village manager points out, Schaumburg is also relying on its property tax to
pay rising pension costs.
The Daily Herald reported that some new revenue sources may allow the village to
reduce the levy to $20.5 million from $20.7 million – a 1 percent decrease. But
police and fire pensions will consume nearly half of the levy, totaling $9.7
million. Village Manager Brian Townsend told the Herald that rising pension
costs are a primary reason the village’s current property tax levy may need to
remain unchanged.
Until 2009, Schaumburg did not levy a village property tax, instead financing
its operations through local sales tax revenue. The Great Recession, which
coincided with increases in pension payments mandated by the “Edgar Ramp,” led
trustees to enact its first property tax in November 2009. The village lowered
its levy each year until 2014, and it has since remained flat. But the pension
share of the village’s annual property tax levy has grown considerably in recent
years, village data show.
Growth in pension costs has strained municipal budgets across the state, often
resulting in higher property tax bills and a reduction in core services. In
August, Peoria – where 85 percent of the city’s property tax revenue goes to
pensions – sent layoff notices to 27 municipal employees in order to cover
pension costs. This followed a similar crisis in the south Chicago suburb of
Harvey, where 18 firefighters and 13 policemen lost their jobs to make room for
pension funding.
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Schaumburg has not found itself in that situation
yet, but cities such as Peoria and Harvey should serve as cautionary
tales for the rest of the state. And while services haven’t been cut
in Schaumburg, local taxpayers are certainly feeling the pinch of
rising property taxes.
In addition to the village’s police and fire
pension costs, records from the Illinois Municipal Retirement Fund,
or IMRF, show Schaumburg Park District’s 64 current IMRF-enrolled
retirees have collectively received more than $6 million in pension
payments, with $1 million going to one pensioner alone. These costs,
coupled with the village’s police and fire pension liabilities,
contribute to Schaumburg residents’ high property tax bills.
Schaumburg officials’ acknowledgment of its pension problem is a
positive first step, but taxpayers are in need of reform – from both
state and local lawmakers. Local leaders need to rein in spending,
and trim bloated government salaries that inflate future pension
benefits. State lawmakers can help in the short term by instituting
401(k)-style retirement plans for all new government workers. But if
the state expects to overcome its pension woes, lawmakers must
ultimately amend the state constitution to allow for changes to
unearned, future retirement benefits for government workers.
Without these reforms, Schaumburg will risk following the same path
as municipalities like Peoria and Harvey.
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