Bruce Rushton
The Illinois Times
Seven years ago, the city of Springfield faced a fiscal crisis so serious that then Mayor Tim Davlin formed a blue-ribbon committee to define the problem and recommend solutions.
The housing bubble had burst and the stock market had crashed. Springfield and other governments were laying off employees and instituting furloughs while the federal government propped up banks. Nearly 12 percent of the city’s corporate fund was going toward police and fire pensions, and the city was dipping into reserves, inviting cash flow problems and increased borrowing costs from lowered credit ratings.
“The financial issues facing the city are substantial and urgent,” the committee wrote in its report. “The inescapable fact is that in order to meet future mandated pension fund payments, the city must reduce expenses and raise revenues to dramatically different levels than exist today. … The city does not have sufficient revenue to meet its pension obligations and maintain city services.”
Since then, the city has raised revenue, increasing the sales tax and sewer fees to pay for infrastructure repairs while raising power rates to keep City Water, Light and Power solvent. Library branches closed to save money have not been reopened. Municipal employment has dipped from 1,706 in 2010 to 1,427 this year, according to data on the city’s website.
Cutting costs in the police and fire departments was critical, according to the blue-ribbon committee. The police department today has about 40 fewer employees than in 2007. Head count at the fire department, however, remains essentially the same, with just two fewer enrollees in the fire pension system than seven years ago, when the blue-ribbon committee warned of fiscal crisis. Unfunded liabilities in the police and fire pension systems have mushroomed in the past seven years, going from $64.3 million in the fire pension fund to more than $120 million; the shortfall in the police pension fund has more than doubled over the same time period, ballooning to almost $107 million from $50.1 million, which has forced the city to increase contributions to the funds to ensure that there will be enough to pay future pensioners.
Springfield two years ago became a poster child in a Wall Street Journal article that painted the capital city as drowning in pension obligations that consumed more than 20 percent of the city’s budget, squeezing out money for libraries, public works and other services. Mayor Jim Langfelder says that reductions in pension benefits for employees hired after 2010 will help ease future pension obligations, but costs have continued to rise, with unfunded liabilities in the police and fire funds growing by more than $1 million apiece in the year since the Wall Street Journal used Springfield to illustrate the pension crisis in municipalities across the nation.
While police have reduced head count, there have been no corresponding cuts in the fire department. Ward 7 Ald. Joe McMenamin has long warned that the city’s pension obligations are unsustainable and will eventually force either higher taxes or reduced levels of service.
“You don’t see it happening because it’s so incremental, but the next generation will pay for it,” McMenamin says. “It deserves a lot more attention than it’s received, that’s for sure.”
Springfield, McMenamin says, needs to start living within its means when it comes to the fire department, and fixing things will require leadership both in the General Assembly, which decrees what pensions cities must pay, and the mayor’s office.
“The pay and benefits for our fire personnel are greatly out of proportion to what the city can afford, what is needed to attract quality applicants and what is enough for a quality standard of living,” McMenamin said.
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Joe McMenamin for Ward 7 