Champaign–Val W. Zimnicki, Taxpayers United of America’s Director of Outreach, reports from Champaign on the city’s financial status.
“There are a lot of things that the City of Champaign has going for it,” said Zimnicki. “Unlike the rest of the state, Champaign is actually growing in population. The city has an economic powerhouse in the form of the University of Illinois at Urbana-Champaign. The City also has done well with its finances, as shown by its triple A rating given to their bonds by Moody’s investment service.”
“My only question, for the city and Champaign taxpayers, is: How long will the good time continue?”
“The City of Champaign is not an island. The economic situation of the areas around it will affect the city. The state of Illinois, in which Champaign resides, has been dealing with economic mismanagement for years. Illinois’ bonds are rated by Moody’s at Baa2, meaning they are subject to moderate credit risk. They are considered medium grade and, as such, may possess certain speculative characteristics. Chicago, the economic engine for Illinois and roughly a two-and-a-half-hour drive from Champaign, is rated at Ba1. Ba1 bond ratings are judged to have speculative elements and are subject to substantial credit risk.”
“As the State of Illinois and most of its municipalities continue to struggle, they could drag the City of Champaign down with them. Higher property and state taxes and lower taxpayer investments in the University will damage Champaign in the long run.”
“Why are Illinois and many of its cities struggling? One thing only: Government employee pensions. And the pension fund for retired municipal workers is a reason why Champaign property taxes are going up.”
“The Illinois Municipal Retirement Fund (IMRF) sucks up Champaign property taxes, while the other government pensions are supplemented with the state income tax.”
“Every city in Illinois is struggling with government-employee pensions. Moody’s investment service reports that the City of Champaign proudly displays one of the top reasons for a downgrade: Growth in the city’s debt burden and pension burdens.”
“For example, in 2010 the City of Champaign paid $1,890,925 into IMRF (Illinois Municipal Retirement Fund), $3,364,726 into the police pension fund, and $3,202,615 into the firefighter’s pension fund. In 2020, the contribution to IMRF was $1,930,235, $6,165,648 went into the police pension fund, and $3,801,886 went into the firefighter’s pension fund.”
“While not nearly as disastrous as other less responsible cities, we are seeing a clear creep in taxpayer dollars going to pay for government-employee pensions. Additionally, the pensions that are being paid out are less than responsible.”
“For example, Steven C. Carter’s current annual IMRF pension is estimated to be $137,785 in 2020. He contributed $162,118 to his pension plan, and it is estimated he will receive $2,413,421 over a normal lifetime.”
“Robert T. Finney’s current annual IMRF pension is estimated to be $134,106 during 2020. He retired at age 51 and put only $153,814 into his pension fund. He is estimated to receive $4,540,906 from his IMRF pension over a normal lifetime.”
“Additionally, it is important to note that almost everyone with an IMRF pension is also eligible for Social Security.”
“The city of Champaign is doing well for now, but there is a sword hanging over its head. The price tag for government pensions is going up, including its property taxes, and the state around it is sinking. If the City of Champaign wishes to avoid a terrible economic crisis, it needs to be a frontrunner calling for the State of Illinois to institute pension reform before it’s too late.”
