Clare Kelly.

Members of Evanston’s Finance and Budget Committee Tuesday evening debated how to close the city’s public safety pension funding gap.

Ald. Clare Kelly (1st) proposed a model that purports to shelter homeowners and other property taxpayers from having to pick up the tab for the increased payments needed over the next 18 years to close the funding gap.

She called for adding Personal Property Replacement Tax funds from the state and money from prior year budget surpluses to the property tax levy that now funds the pensions.

But the PPRT money now is used for other purposes and there’s no guarantee the city will have budget surpluses in future years — so her plan likely would require spending cuts elsewhere in the budget — or increases in other city taxes and fees — to work.

David Livingston.

Committee Chair David Livingston, on the other hand, is proposing to keep the property tax levy unchanged in next year’s budget, close the gap for that year with some mix of PPRT and budget surplus funds and then work out a longer term public safety pension funding policy by the end of this year.

Given that the police and fire departments serve all city residents — regardless of whether they are homeowners — it’s not clear why property taxpayers alone should be exempted from picking up the pension funding shortfall tab — but homeowners do tend to turn out to vote in local elections at higher rates than other residents.

The city’s pension actuary firm, Foster and Foster, has estimated that closing the pension funding gap, assuming a 6.5% return on investments, will require spending about $6 million more per year on pension fund contributions than the $25 million the city is contributing this year.

But the projections show that once the funding gap is closed the required contributions would drop to a total of less than $5 million a year by 2042.

So the long term benefit to future city taxpayers appears to be very dramatic.

The public safety pension funds have been hovering around a 50% funding level in recent years, despite previous, less dramatic efforts by the City Council to increase contributions.

The committee is scheduled to continue its pension funding plan discussion at its next meeting in June.

Bill Smith is the editor and publisher of Evanston Now.

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