For decades Illinois, Chicago, and many other Land of Lincoln municipalities have been kicking the can down the road in regards to public worker pension obligations.
Harvey, a poverty-stricken southern suburb of Chicago with a long history of corruption, has not just reached the end of the road, it has run off of the cliff, in the manner of Wile E. Coyote. Because Harvey has not been adequately funding its police and fire pension plans for years, a state law–Illinois ironically is guilty of the same sin with its pensions–requires the state treasurer to withhold the city’s portion of sales tax revenue, $1.4 million, to pay into those funds instead of that cash being deposited into the town’s general revenue account. Harvey’s police and fire pensions are funded at only 51 and 22 percent, respectively.
On Friday Harvey laid off half of the employees in its police and fire departments, along with about a dozen other municipal workers.
Ironically two firefighters with 18 years on the job were among those given pink slips, they are two years away from qualifying for their own pensions.
Harvey has had many other brushes with malfeasance, and like Wile E, it has used a bag of tricks from its own version of the Acme Corporation to remain airborne. It purchased Lake Michigan water from Chicago, resold it to neighboring towns and used that revenue for payroll and other expenses. Until Chicago sued Harvey didn’t pay the larger city for that water. Its four-term mayor, Eric J. Kellogg, was fined $10,000 and banned from participating in future bond offerings after Harvey diverted cash from a hotel development plan to other items, including payroll.
The FBI, according to the Chicago Tribune, is investigating bribery allegations involving a consultant of Kellogg, the former mayor of neighboring Dixmoor who is a twice-convicted felon. The case is centered on secret recordings made by Harvey’s comptroller, who committed suicide in 2016, the same year that Fox Chicago, citing reports from experts, said the city is “worse than broke.”
Ah, it’s easy to dismiss Harvey as an aberration even in a state with a national reputation for corruption. In my lifetime four Illinois governors have been sent to federal prison and a fifth faced trial for tax evasion but was found not guilty.
Pension troubles such as the one Harvey is facing can’t come to my Prairie State town, can they?
They sure can.
A researcher from the University of Chicago says there are 74 other police or fire departments with pension funds that are comparably underfunded as those of Harvey. One of those towns in that predicament is Niles, the village west of the Chicago suburb where I live. I have some friends who reside there and they pride themselves on their low–well, low for Illinois–property taxes.
Niles is one of those 74 towns. In 2010 its mayor for nearly five decades served a year in prison for his role in a kickback scheme.
Term limits anyone?
Which Illinois municipality will be the next Harvey? Perhaps Chicago, as its pension plans are the worst-funded among the nation’s largest cities.
As for Illinois, its pension funds are among the worst-funded among the fifty states.
Harvey is losing population.
Chicago is losing population.
Illinois is losing population.
Who will be the “last man standing” over the edge of the cliff stuck with the bill?
John Ruberry, a fifth-generation Illinoisan, continues to eye his exit strategy while he blogs at Marathon Pundit.