City Council members in Alton, Illinois, have voted to allow negotiations to go
forward in selling off the city’s sanitary sewer system and water treatment
plant in order to help pay for Alton’s growing pension burden.
Illinois American Water submitted a proposal to buy the plant and sewer system
in a Feb. 14 Alton City Council meeting, according to the Alton Telegraph.
Aldermen voted 6-1 in favor of a motion to review and consider the proposal.
“It is something we are going to have to do because of other things involved
with the city, like the pension [debt obligation] we can’t afford,” said
Alderman Charles Brake in the Feb. 14 meeting, according to the Telegraph. “The
treatment plant is in bad shape, requiring several million dollars in repairs.
This is not something you necessarily want to do, but the city is not in the
position to meet the pension obligation in the next several years.”
The Telegraph explained that Alton’s police and fire pension funds have a
combined debt of more than $113 million, according to Alton City Comptroller
Kirby Ontis, who cited numbers from actuaries with the Illinois Department of
Insurance, or DOI.[to top of second column]
The DOI recommended Alton pay more than $3.7 million to its fire pension fund
and just over $4 million toward its police pension fund starting in April. The
recommendation comes as the state is requiring local governments to bring their
pension funds up to 90 percent funded by 2040.
But for Alton, this feat will prove very difficult, if not outright impossible.
The Alton fire pension fund has less than 31 cents on hand for every dollar owed
in future benefits, according to a 2017 DOI report. Alton’s police pension fund
is in very poor shape as well, with just over 32 cents on hand for every dollar
owed in future benefits.
Both funds remain in poor shape despite increased contributions from taxpayers.
From 2012 to 2016, city contributions to the Alton fire pension fund increased
nearly 13 percent, but the fund actually ended up worse off, falling to just
over 30 percent funded in 2016 from 31.6 percent funded in 2012.
Taxpayer contributions to Alton’s police department pension fund increased more
than 18 percent from 2012 to 2016, but its funding level improved by less than 1
The city is also struggling to make new repairs to
the treatment plant mandated by the state.
Alton residents are dealing with a difficult prospect that all too
many communities are facing across Illinois: sacrificing services to
fund massive pension debts.
Meanwhile, property taxes have been going up for
Alton taxpayers and residents across Madison County. While the Alton
City Council voted to keep its 2017 property tax levy nearly flat in
December, the Alton School Board raised its property tax levy nearly
7 percent. A 2015 Illinois Policy Institute study found that between
2000 and an average of years 2009-2013, the average residential
property tax burden for Madison County grew by more than 35 percent.
As if is this situation wasn’t bad enough, Alton taxpayers may even
see an increase in their water rates, depending on the deal city
The long-term solution to this problem for Alton, and other towns
dealing with pension troubles, is to transition new city employees
to 401(k)-style pension plans. A viable 401(k)-style option already
exists at the state-level for university workers. The program
started in 1998 and has more than 20,000 university workers
While this problem is ultimately Alton’s to deal with, Springfield
has severely limited the Alton City Council’s options.
The state mandates towns like Alton create and maintain costly
pension funds for its police and professional fire departments. And
thanks to the Illinois Constitution’s pension protection clause,
once pension benefits have been promised, they cannot legally be
“diminished or impaired,” meaning that even modest restructuring of
existing pension obligations could run afoul of the courts.
These factors, along with the state mandate to raise local pension
funding levels to 90 percent by 2040, have made tough choices
inevitable for Alton leaders.
And unless lawmakers make serious reforms, Alton residents will
continue to pay more for less.
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