Southwest Illinois county faces property tax hike, layoffs amid rising pension costs

Perry County is home to the DuQuoin State Fair, but the prize hog is a pension system eating money needed for public safety and other core services. County employees face layoffs.

A small county in southwest Illinois is facing big pension obligations and the possibility that it won’t make payroll in late May.

Perry County faces a $1 million shortfall that is threatening its employees’ second payday in May. County leaders May 13 will consider recommendations to hike property taxes and fees, to curb spending, to lay off employees and to shorten their workweek.

“We basically need $1 million in the month of May just to meet payroll and to pay what bills we have left,” Perry County Treasurer Mary Jane Craft told WPSD-TV. “If we just meet payroll and not our bills, we still need $400,000.”

How did the county fall into crisis? Shrinking revenue and growing pension demands appear to be at the heart of the crisis.

General fund revenue to operate the county was just less than $6.6 million during the 2012-2013 budget year. The 2017-2018 revenue was $1.5 million less.

During that same period, the county’s pension obligations ballooned. Revenue dedicated to pension payments jumped to $900,000 from $225,000 .

High labor costs are another issue, said County Clerk Beth Lipe. The county hired a consultant whose recommendations include cutting employees to 30 hours per week, layoffs, fee increases and severe spending cuts. She said a property tax increase next year is inevitable.

“If we hold the line and make sure nobody crosses it on their budgets, then maybe in one and a half to two years we’ll be out of financial problems,” Lipe said. “I’ve lost a lot of sleep over it. I worry about everyone. The consultant said labor is our most expensive item, and the only one you can adjust immediately.”

County residents are resistant to the property tax solution the county board will consider May 13.

“I think they need to start laying people off, cut back on the payroll. That’s what we all have to do. I don’t think taxpayers should be responsible for that,” resident Kevin Kellerman told WPSD-TV.

Perry County homeowners in 2017 averaged $1,556 in property taxes on mortgaged houses with a median value of $86,200, according to U.S. Census Bureau data. Property taxes in the county grew $301 per person, adjusted for inflation, between 1996 and 2016.

County government is not alone in pensions sapping available revenue. Of every $1 in property tax for municipal police service, 95 cents goes to pensions. The rate is 92 cents for fire services. Lipe said county leaders for years have resisted increasing property taxes because the schools, local hospital and other taxing bodies have been raising them.

Unsustainable growth in pension costs have resulted in service cuts and soaring property taxes across Illinois.

Illinoisans pay the second-highest property taxes in the nation. A proposal by Gov. J.B. Pritzker to replace Illinois’ constitutionally protected flat income tax with a progressive tax would do nothing to address Illinoisans’ high property tax burden. In fact, property taxes have soared by over 35 percent in the only state in 30 years to switch its income tax system from flat to progressive.

Until Illinois adopts a constitutional amendment that protects earned retirement benefits, but allows for reasonable adjustments to the growth of future, unearned benefits, current public services will remain in jeopardy and politicians will continue to call for tax increases.

Illinois needs pension reform, not tax hikes.