CHAMPAIGN PROPERTY TAXES CLIMB TO FEED THE ILLINOIS MUNICIPAL RETIREMENT FUND

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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.”

Millionaire Monday: James A. DeLeo

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 James A. DeLeo is the very model of a modern IL. politician. He was a former Democratic member of the Illinois House of Representatives, and the Illinois Senate. He was also an Assistant Majority Leader for a period.  

During his time in Illinois politics, DeLeo, like so many other politicians was hostile to taxpayers. Take for example his performance in the 93rd Illinois General Assembly. He voted in favor of SB1725, a new death tax that at the time was estimated to cost taxpayers $200 million in 2004, and $500 million every year after. He voted in favor of SB842, a $59 million heavy machinery tax that targeted Illinois manufacturers, including of all things graphic design companies. He also voted in favor of SB83, a bill that allowed park districts to raise property taxes $10.5 million a year without referendum. When then Governor Blagojevich vetoed the bill, DeLeo voted in favor of the veto override.

DeLeo also had his share of controversies, which is the norm by Illinois standards. DeLeo was indicted by a federal grand jury in the “Operation Greylord” investigation of corruption in Cook County for taking bribes. Though nothing was found regarding bribes, in 1990 he was sentenced to one year of unsupervised probation for claiming $1,700 in deductions he was not entitled to on his 1982 tax return.

Also like so many others, DeLeo is also a pension millionaire. DeLeo receives from his General Assembly Retirement System (GARS) pension an estimated $116,241 a year, with the majority of the money sourced from state taxpayers. DeLeo put $169,550 into his pension, and since his retirement from politics has been given an estimated $1,034,749. By the time he reaches 85, DeLeo is estimated to receive $3,377,802 from his pension.

There are plenty of pension millionaires, and we at Taxpayers United of America are going to put a spotlight on all of them! If taxpayers would like to view the latest annual report on Illinois pensions, there is a link to it on our website: 15th Annual Illinois Pension Report – Taxpayers United Of America

15th Annual Illinois Pension Report

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Click Here to view Pension Report Overview
Last year, Illinois taxpayers were funding million-dollar pension payouts for 148,654 retired government employees. That number for our 15th annual pension study has since climbed to 151,391.
These pensions are not small. According to information provided by the pension funds, 124,138 of these pensions meet or exceed an annual payout of $50,000. 27,502 of these pensions also exceed $100,000 annually. This is because the vast majority of Illinois government pensions are subject to a 3% compounded cost of living adjustment. This compounding is the primary reason we have so many pensions turning retired government employees into pension millionaires.

The exponential growth of the six statewide Illinois government pension funds continues unabated. These six funds include the General Assembly Retirement System (GARS), Judges Retirement System (JRS), State University Retirement System (SURS), State Employees Retirement System (SERS), Teachers Retirement System (TRS), and the Illinois Municipal Retirement Fund(IMRF).
Some of the key statistics regarding how the pension system is funded are as follows:

•Taxpayers are estimated to contribute for 2021 ten billion dollars in order to fund the retirement of government employees. This is a one point three billion dollar increase from 2018.

•Taxpayer contributions are still steadily ramping upwards year over year, despite the recession.

•For the year 2021, estimated employee contributions to their own pensions are down an estimated $35 million from last year.

•The reported net position of the six state wide funds worsened another $4 billion from last year.

Estimated taxpayer payments

Some of the key statistics regarding how the pension system is funded are as follows:

•Taxpayers are estimated to contribute for 2021 ten billion dollars in order to fund the retirement of government employees. This is a one point three billion dollar increase from 2018.

•Taxpayer contributions are still steadily ramping upwards year over year, despite the recession.

•For the year 2021, estimated employee contributions to their own pensions are down an estimated $35 million from last year.

•The reported net position of the six state wide funds worsened another $4 billion from last year.

It is important to remember that taxpayer payments happen regardless of the state budget condition. While taxpayers are losing their jobs and the state coffers run dry during the pandemic, retired state employees retain an iron grip on taxpayers’ wallets. Taxpayers are also the primary source of funding for these massive pensions.

There is a wide spread narrative that the pensions are largely funded by both employee deposits and robust returns on investment. The facts, don’t bear that out. While the state of each individual pension fund is different, some like the General Assembly Retirement System refute any notion of self-reliance. For every dollar from either politicians or investments, taxpayers added an estimated $6.80 to the General Assembly Retirement System. Taxpayers pay more, and will continue to pay more into this broken system for the foreseeable future.

With the current funding requirements, all but the IMRF funding falls extremely short of necessary levels to pay every promised government employee pension.

TRS   40.5%

JRS    37.9%

GARS 16.5%

SERS 38.7%

SURS 42.2%

IMRF 90%

Although the IMRF funding level is in the proper range for a viable schedule of amortization, it doesn’t illustrate the extreme burden that this places on property owners. Illinois statute requires that IMRF pension deposits be paid by taxpayers before any other liabilities.. Under these extremes, taxpayers are being forced out of their homes because they can’t afford IMRF driven property taxes and housing expenses. Additionally, this requirement forces local governments to sacrifice services needed today in order to pay for services rendered in years past.

TEF has and does advocate for pension reforms, included but not limited to:  Place all new government hires into a defined contribution account as opposed to the current defined benefit system. Immediately discontinue the automatic cost of living adjustment and make promises to only increase cost of living in alignment with current financial conditions. Remove all of the loopholes that allow salary spiking during the last years of employment on which pension calculations are made.

Click Here to view Top 200 TRS Pensions

Click Here to view Top 200 JRS Pensions

Click Here to view Top 200 GARS Pensions

Click Here to view Top 200 SERS Pensions

Click Here to view Top 200 SURS Pensions

Click Here to view Top 200 IMRF

Click Here To View All $100,000+ Pensions