State pension requirements force Geneseo to seek levy hike

Lisa Depies
Geneseo City Hall

As Geneseo city officials prepare to set the 2017 tax levy, one topic keeps popping up — pensions.

Specifically, the city is faced with rising costs in the Illinois Municipal Retirement Fund (IMRF), Social Security and police pension categories.

“This is not an issue that’s specific to Geneseo. Everybody is going through this,” said Alderman Martin Rothschild.

To meet pension obligations, Geneseo aldermen are considering a 22.64 percent levy increase.

However, city officials are quick to point out the 22.64 percent would be on the city’s portion of the tax bill, which in 2015 was 7.37 percent, not on the entire tax bill, which encompasses rates from 10 different taxing bodies.

For a homeowner with a $100,000 house, the city’s portion of the tax bill would increase $39.63.

“We don’t want taxes to go up, but we don’t have much of a choice,” said Rothschild.

In many ways, the city’s hands are tied by state regulations.

Police pension fund benefit levels are set by the state, which has mandated municipalities fund at least 90 percent of their pension obligations by the year 2040.

At present, Geneseo has approximately 50 percent of its police pension obligations funded.

“The longer you defer fully funding the pension, the bigger and bigger the liability becomes down the road,” said Geneseo city administrator Lisa Kotter.

Bond rating companies, such as Standard & Poor’s, have increasingly taken pension funding into account when establishing a community’s bonding ability.

“You’ll take a hit on your Standard & Poor’s rating the longer you defer,” explained Kotter.

State law requires taxing bodies to hold a “truth in taxation” public hearing any time there is a proposal to the increase the tax levy by 5 percent or more.

The Geneseo City Council approved scheduling a truth in taxation public hearing for a levy increase of 22.64 percent, however aldermen can vote to set the actual levy at anything 22.64 percent or under.

In 2015, a total of $862,042 was levied by the city.

At the Nov. 22 committee of the whole meeting, three different funding percentages were discussed.

To meet the state recommended full-funded pension amounts for 2017, the 22.64 percent increase is needed, which would mean levying $1,057,242.

To contribute the bare minimum the state would accept to pension funds, Geneseo must increase the levy 13.98 percent ($971,591).

City officials also discussed a “middle ground” levy increase of 19 percent ($1,014,416).

Had city aldermen not wanted to hold a truth in taxation hearing, keeping the levy at 4.99 percent would require drastic cuts to the city budget and staffing levels, said Kotter.

“We either start to catch up on our obligations now or later, and we’ve already deferred it out so long,” said Rothschild.

In setting a new levy, Geneseo aldermen also are attempting to predict the future.

Illinois lawmakers have discussed establishing a levy freeze which would lock taxing bodies into an existing levy amount.

“If we’re frozen at the new levy amount, we’ve at least given ourselves a small cushion,” said Kotter.

In all levy scenarios presented to the council, only IMRF, Social Security and police pension categories are set to increase. City officials look to keep all other category amounts the same as in 2016 and plan to decrease the insurance and tort amount by $15,000.

A truth in taxation public hearing on the proposed levy will be at 5:45 p.m. Tuesday, Dec. 13. The final levy will be approved at that evening’s city council meeting.