Legislature closes Spring session with minimal impact on cities and villages

The Illinois Legislature completed its spring session last week. As is usually the case, most of the significant activity occurred in the final days, including approval of the state budget.

Going into the spring session, cities and villages had several important issues. In some cases, city officials wanted to see things changed. In other cases, we simply wanted things to be left alone. The main issues were:

1. Protecting revenues used to fund city services
2. Pension reform
3. Protecting local government decision-making
4. Opposition to unfunded mandates imposed by state government

Now that the session is over, let’s take a look at the good news and bad news from the session. I like to hear good news first, so let’s start there:

LGDF Safe

The Local Government Distributive Fund (LGDF) consists of approximately 6% of total state income tax revenue. The fund is divided among municipalities by population and St. Charles receives approximately $2.6 million annually.

The Senate Democrats' floated a proposal to freeze the amount that cities and villages would receive – essentially preventing municipalities from capturing any growth. The proposal wasn’t approved and the state budget for FY 2013 leaves LGDF revenue intact. That’s the good news.

The bad news is that the budget once again diverts some Corporate Personal Property Replacement Tax (CPPRT) revenue to fund the regional superintendents of schools. This is what was diverted in the fall of 2011 to fund the regional superintendents.

Fire Service Consolidation

Under the Unified Fire District Act (Senate Bill 3667), consolidation of local government services would become more complicated and insert organized labor into a process normally reserved for local elected officials. Right now, the cities of Batavia, Geneva, and St. Charles collaborate to provide paramedic service through an intergovernmental cooperative called Tri-City Ambulance. It's served the communities very well over the years. Legislation such as this could negatively impact it. The bill was not approved.

Employee Legal Representation

Senate Bill 3796 would require cities and villages to indemnify an employee and pay for a lawyer of his/her choice, if the employee is sued in relation to the performance of his/her job. Furthermore, in suits involving multiple employees, the municipality must pay for each employee's lawyer.  This bill could greatly increase the cost of defending employees. St. Charles went on record with our legislators as opposing this legislation. The bill was not approved.

And, the bad news:

Pension Reform

It appeared that legislation to restructure the pension benefits for most of the state-funded pension systems was moving forward, but the effort collapsed over disagreements concerning a provision to shift some teacher pension funding costs to local school districts. The General Assembly is expected to return for a special session during the summer to continue working toward a comprehensive pension reform bill.

Reforms for local government pension programs were not addressed by either chamber.  The reforms for state pension plans are expected to serve as a blueprint for reforms of local government pension plans. Some long-term solutions aimed at reforming public pensions that would provide relief for taxpayers include:

• Requiring employees to contribute more toward the cost of their pensions. Currently, employees only contribute about one-third while local property owners pay the remainder;
• Adjusting cost-of-living-increases from the current 3 percent so they are “right sized” and not compounded annually;
• Increasing the retirement age for public safety employees, who can now retire with full benefits at the age of 50, and – in many cases – receive benefits for longer than they worked for the municipality; and
• Consolidating the 638 individual public safety pension funds into a multiple employer pension system similar to the Illinois Municipal Retirement Fund to increase investment returns and lower overall operational expenses.

Charitable Solicitation

Senate Bill 3518 requires municipalities and counties to allow police officers or firefighters to collect charitable contributions on streets, regardless of safety and traffic concerns, so long as they file an appropriate application.  There are obvious concerns about public safety and the efficient administration of traffic. In addition, this bill could open up communities to civil-rights liability because it requires municipalities to violate the First Amendment by mandating that they give preferential treatment concerning free speech to certain individuals.

All told, the session could have resulted in things being a lot worse for cities and villages.

The legislature will return for its fall session from November 27-29 and December 4-6; however, it is likely that the General Assembly will convene over the summer for a special session.

Stay tuned!