Peoria residents face new property tax fee devoted entirely to pensions

The city of Peoria is adding a new fee to residents’ property tax bills to help shore up the city’s public safety pensions.

Peoria city leaders will be slapping residents with a “public safety pension fee” in October, according to WMBD-TV, in an effort to help the city meet its pension obligations by the end of the year.

Peoria needs an additional $1.2 million by the end of 2019 to properly fund the city’s police and fire pensions, City Manager Patrick Urich told WMBD-TV. Pension payments for public safety retirees grow 11% each year, according to Urich, making them the city’s fastest-growing expenditure. He said the aim of charging a new fee is to avoid having to raise property taxes.

The amount residents pay will depend on the size of their property, and the fee will continue for the next three years.

Over the last decade, Peoria has seen its annual public safety pension costs double to $20 million from $10 million, according to the State-Journal Register. Peoria residents see 95 cents of every property tax dollar for police captured by police pensions, which is projected to increase to 100% of property tax collections next year. Firefighter pensions already capture every property tax dollar intended for fire services.

That hasn’t been enough to avoid service cuts. The city cut 38 first responder positions in November 2018 to address a budget shortfall driven by pensions. Eighty-five percent of the city’s property tax revenue goes to pensions.

Peoria is not alone: Springfield city leaders learned in August the city must find another $269 million to properly fund its pensions over the next two decades. Other cities, such as Harvey, Carol Stream and Rockford, have also had to raise taxes or make significant cuts to pay for pensions. East St. Louis is facing $2.2 million in firefighter pension debt and is at risk of losing its state funding until the city pays it.

State lawmakers must pursue a constitutional amendment to reform pensions. Without serious reform, growing pension costs will only lead to more tax hikes and service cuts in Peoria and other local communities. Constitutional pension reform is the only way to protect pensioners from insolvency and taxpayers from endless tax and fee increases.