LAKE FOREST — The Lake Forest City Council is exploring short- and long-term solutions to funding pension liability for police officers and firefighters, which may lead to more taxes and eventual joint fire services with other towns.
Looking at the possibility that maintaining its own fire department may not be sustainable because pension obligations are increasing at a greater rate than revenue, the council on Oct. 3 unanimously directed City Manager Robert Kiely to begin communications with nearby municipalities about possibly sharing firefighting responsibilities.
At the same time, aldermen asked Finance Director Elizabeth Holleb to take a deeper look at short-term solutions to continue funding police and fire pensions without cutting other services. Those ideas could include a water fee of $10 a quarter and a larger than anticipated increase in the real estate tax levy.
Regardless of the solution, Mayor Donald Schoenheider said any alternative will not compromise the safety of Lake Forest residents.
“It is the most important thing we do and the most important service we deliver,” said Schoenheider.
Joint Venture With Glenview Works for Dispatch Services
Kiely said the city has been looking at ways to consolidate municipal services with other communities since 2010. Discussions between Lake Forest, Highland Park, Lake Bluff and Highwood resulted in the four communities contracting with Glenview to provide police, fire and ambulance dispatch services in 2013.
“A whole lot of people were nervous at the time but it worked out for us,” said Kiely. “They were doing only dispatch and they did it well. We’ve saved over $400,000 a year because of it and the quality is going up.”
The cost of sustaining its own fire department may not be possible in the long term, according to Kiely. He will now start talking with other communities about ways to work together. He said the problem will start popping up all over the area and the state.
The cost of funding police and fire pensions is increasing at a greater rate than the amount the city can currently raise the property tax levy to cover its share, according to Holleb. Her initial forecasts were for the fire department only. The levy can be increased by more than by more than the tax cap by a 75 percent vote of the council, according to a Lake Forest ordinance.
“The operating costs are increasing at four percent a year and the revenue is increasing at two percent a year,” said Holleb referring to the fire department budget alone.
The increased cost of funding police and fire pensions from the current 2017 fiscal year to 2018 is approximately $255,000, according to Holleb. It will jump to $505,000 in fiscal 2019 and $775,000 the following budget year.
Increased Water Fee Becomes Possible
If the city adds a $10 per quarter fee to each water bill it will add $263,000 to the treasury, according to Holleb. She said a ¼ percent increase in the property tax levy adds almost $74,000. The problem is the projected increases each year require a bigger hike the following year in any short solution until a long-term fix is found.
“The compound monster is here,” said Alderman Tim Newman. “We cannot ignore this one any longer.”
When Kiely and Holleb finished their presentation, Alderman George Pandaleon wanted to know why the focus was on a long- term solution for firefighting when the pension liability for the police officers is the bigger financial issue. Kiely agreed but said it would be easier to get the firefighting issue under control.
“You are 100 percent correct,” said Kiely in response to Pandaleon’s question. “Taking that on now would be unmanageable. If we work on one it could be a model for the other.”
Alderman Michael Adelman said he had concerns about a short-term solution when the projections for the future are dire. He said he saw no sense of using a bucket to bail water out of a sinking boat that was going down anyway.
“You can use that bucket to bail if you’re waiting for the coast guard,” said Pandaleon.
Holleb said that along with developing forecasts to be used when the council meets in a budget meeting Nov. 14, she will look at variations on the theme of a water fee increase. She will look at the impact of different fees for private residences and commercial properties.
Time To Reach out to Springfield
Schoenheider and several of the aldermen said a major reason for the problem arises from legislation passed by the Illinois General Assembly that imposes liability on municipalities while restricting the ability to collect additional revenue. They want to start reaching out for help.
“Our state senator and state representative have been supportive,” said Schoenheider in a DailyNorthShore.com interview after the council’s regularly scheduled meeting at City Hall. “We have to start reaching out but we have to deal with what we can control.”
Alderman Prue Beidler, who also spoke to DNS.com after the meeting, said that along with state Sen. Julie Morrison (D-Deerfield) and state Rep. Scott Drury (D-Highwood) conversations should be initiated with people such as state Sen. Daniel Biss (D-Evanston) who have shown a willingness to tackle the problem.
Pandaleon expressed a sense of urgency because term limits will bring four new faces to city government in April. He will be leaving along with Schoenheider, Adelman and Alderman Catherine Waldeck. Pandaleon said there will be a learning curve with new elected officials and urged getting a blueprint in place while the current council is still in office.