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Municipalities need pension relief
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Published: 10/24/2009 11:45 PM

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We are not, as readers of this space know, advocates of credit-card government. We worry greatly about the hugely deepening national debt, and we believe a major part of Illinois' financial problems are rooted in a sorry tradition of putting off for tomorrow anything the state can avoid paying today. Good governments minimize spending and pay their bills on time.

That said, we support a measure currently being negotiated in Springfield that would allow municipalities to delay funding a part of their pension obligations this year with the caveat that the cut in the obligation is no more than a one- or possibly two-year emergency measure while a more permanent solution to the funding challenge is developed.

The idea is being described as a pension relief measure for municipalities, but that's really something of a misnomer. It's actually a property tax relief measure for homeowners because that's who will be left paying the bill if something isn't done.

As Senior State Government Editor John Patterson reported a week ago, widespread investment losses that followed Wall Street's falloff earlier this year shifted an increased burden for upcoming pension contributions to the taxpayer. This increase amounts to hundreds of thousands of dollars for most area suburbs. For example, in Arlington Heights, the increase is estimated at $1.6 million; in Rolling Meadows, $1.8 million.

This is not small change. To pay for it, municipalities already strapped by the recession would inevitably resort to an increase in property taxes. In the Rolling Meadows example, the increase would raise the city's portion of the property tax by nearly 30 percent.

This would mean huge increases for taxpayers who already are reeling from recessionary pressures.

The proposal being negotiated in Springfield would not eliminate the increase. There still would be one. But it would cap it at 10 percent. In effect, in the Rolling Meadows example, it would allow the city to delay paying the other 20 percentage points of its obligation to the pension plan.

This is reasonable, even for those of us who normally oppose government postponements of financial obligations.

Unlike the state, municipalities have been disciplined in paying their debts on time. And just as pertinent, much of the responsibility for this debt is the state's in the first place since it imposed these pension obligations on municipalities.

If nothing is done, the taxpayer will suffer. Action is needed now, in the current veto session, to avoid that. Let's get something done.