The City Council’s leading advocate for higher pension funding went looking for ways to find $4.5 million in loose change in the city budget Monday and came up short.
Ald. Clare Kelly (1st) said the city’s annual revenue from the real estate transfer tax has always been way over budget projections and suggested diverting a half-million of the excess each year to fund pensions.
Evanston Now checked out that claim, tracking how actual RETT revenue aligned with amounts projected in city budgets going back to 2007.
What we found was dramatic variation in actual revenue generated from year to year, with the revenue generated falling below the budget projection for five of the 15 years for which complete data is available.
Overall, the over-budget revenue for those 15 years came in at just 10% of the total budgeted amount, or about $283,000 per year.
Ald. Jonathan Nieuwsma (4th) said the city shouldn’t expect too much from that revenue source in the near future — especially given high interest rates that are depressing the real estate market.
In the end, Nieuwsma said, the budget amount is just a projection, adding that, to be financially prudent, he’d rather under-project and find the city with a surplus at the end of the year.
Kelly also suggested the city could jack up the amount of revenue projected in the budget from the personal property replacement tax distributed to municipalities by the state.
She suggested raising that budgeted amount from $1.75 million to $2.75 million and allocating the extra million to the pensions.
But the city’s chief financial officer, Hitesh Desai, said that revenue is subject to arbitrary changes by the state and that over the past several years it’s never been close to the amount received this year.
In addition, he said, the Illinois Municipal League is forecasting that PPRT funding will be cut next year.
The City Council is scheduled to adopt the 2023 budget at a special meeting on Monday.
The alders indicated this week they want to fully fund the public safety pensions.
If they can’t find some other revenue source, the backup solution is to raise property taxes by about 8% to fund the pension obligation.
Pension funding advocates argue that step — as painful as the tax hike might be — would save taxpayers far more money in avoided interest payments on the ballooning pension debt down the road.