Would residents be willing to pay, say, $32 more a year in city property taxes if the extra funds would place Evanston on track to meet its pension obligations to police and firefighter retirees and their families by 2040?

Members of the city’s Finance and Budget Committee placed that possibility on the table at its Nov. 8 meeting.

Under the proposal, which the committee plans to present to City Council members at their Nov. 14 meeting, the city would combine the $2 million generated by a property tax hike with money from the city’s reserve fund to come up with the $4.4 million the city needs to get on a 100% funding track.

The city’s current pension proposal calls for funding the pensions at a 90% rate, still more than the state minimum.

At 90%, though, the city would still be accumulating debt because of unfunded interest payments. 

At that rate, if 10% is ignored for the next 20 years, the accrued unfunded liability in the police fund, for instance, would grow to more than $87 million, said Tim Schoolmaster, president of the Police Pension Board, at the committee’s Nov. 1 meeting, held virtually.

The city’s failure to meet the state payment levels has resulted in the unfunded accrued liability shooting up from $4 million in 1972 to $126.4 million in the police fund by 2021, according to a chart Schoolmaster presented at the meeting.

Every extra dollar the city puts in now reduces the amount the city will have to fund the pensions in future years, observed one committee member at the Nov. 1 meeting.

Schoolmaster also pointed out at that meeting that the city’s total required payment for 2022 would have been just over $7.1 million, but is around $14.9 million because of unfunded interest payments.

City officials had pulled back previously from a 3.5% increase in their initially proposed budget for 2023. The increase was intended to stay in line with overall increases in personnel and operating expenditures and protect the city against more significant increases in future years, City Manager Luke Stowe said in his transmittal letter.

Property taxes, which are paid by people who own property in Evanston, are allocated among multiple taxing bodies. The city takes 17 cents out of every dollar; the library, three cents; and the two public school districts nearly 70 cents.

A 4% increase in the city’s portion of the property taxes would have generated roughly $2.2 million in additional revenue, resulting in an increase of $64 on a $300,000 home, city officials said.

Committee members are talking about half of that.

At the Nov. 8 Finance and Budget Committee meeting, Council Member Clare Kelly, 1st Ward, in her first term on the council, spoke of the importance of educating the public, “to understand that we have been doing this [accruing debt] for a long time.”

The Finance and Budget Committee was created toward the end of the budget process in 2021, with some new council members calling for more involvement in the issues leading up to the adoption process.

The committee includes five council members and three residents. David Livingston is the current chair of the committee.

Committee members supported by consensus the proposal calling for the city to increase its pension contributions by $4.5 million.

If the council approves the measure, $2.5 million would come from the city’s reserve and roughly $2 million from the increase in the property tax.

To keep on the 100% funded pension path beyond next year, consideration of the issue should become part of the committee’s regular consideration, Kelly said.

Bob Seidenberg is an award-winning reporter covering issues in Evanston for more than 30 years. He is a graduate of the Northwestern University Medill School of Journalism.

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  1. The taxpayers are already paying for the city’s pension through property taxes, the city council decides where the dollars go. The pension liability is a contractual obligation to the pension funds- not fully funding them will cost the taxpayer’s an additional 87 million dollars in a unnecessary tax burden- kicking the can down the road is pretty expensive, maybe look for tax increase revenue for non core city services- there are plenty