Kankakee Illinois Pension Debt Shortage Deadline Missed By The City
This ARTICLE On Kankakee Illinois Pension Debt Shortage Missed By The City Was PUBLISHED On October 6th, 2019
Kankakee Illinois Pension Debt Shortage Missed putting recipients at risk from getting their pension payments.
- The City of Kankakee pension fund is far below on the mark that the state’s requirement on the amount of contributions to the city’s police and fire pension fund
- This will no doubt create an extreme budget deficit for the city
- The city has been struggling with meeting revenues for not just the pension fund but the overall city budget
- Budget deficits and shortfalls need to be covered by taxpayers
In this article, we will cover and discuss the Kankakee Illinois Pension Debt Shortage Missed by the City.
Police And Fire Pension Fund And How It Works
There are hundreds of cities in the state of Illinois. For villages, towns, and/or cities with a public safety pension system, the Illinois Department of Insurance mandates a minimum contribution amount.
See the chart below on the Kankakee Illinois Pension Debt:
The state insurance agency found that the fire pension fund of Kankakee to be in the worst underfunded condition.
- In 2018, 48 full-time workers contributed to the pension fund
- 74 retired firefighters were recipients of the pension benefits
- In general, this is not the way it is supposed to work for the pension system to work
Normally, for a pension fund to have enough reserves, municipalities have more employees than recipients. Otherwise, the system is broken and needs to be fixed.
Kankakee Illinois Fire Pension Debt Shortage Surpass Over $1 Million
The Illinois Department of Insurance suggested number for the city to contribute to its fire pension fund was $3.9 million for the 2018 fiscal year.
- This figure amounts to an increase of $800,000 than 2017
- The city of Kankakee only came up with $2.6 million
- The $2.6 million was far short of the $3.9 million suggested by the state agency putting a $1.3 million shortfall
- This shortage is the largest in city history
The Kankakee Fire Department pension fund shortage stands at 17% funded, marking the lowest funded pension fund in Illinois.
Kankakee Police Pension Fund Shortage
The Illinois Department of Insurance recommended had a higher figure for 2018 than the previous year.
- The agency suggested a total minimum contribution of $3.7 million
- The 2018 mandated number is an increase of $700,000 from the previous year’s figures
- The city was over $1 million short in meeting the recommended amount
- The current status of the police pension fund is only 30% funded than the amount needed
- There are a total of 65 full-time police officers in Kankakee contributing to the police pension fund
- The number of retired police officers collection pensions is at 61
- Data suggests that since 2012, there are more retired police officers and new hirees in the city
This is not a good formula and is the reason why the pension fund has been experiencing shortages year after year.
Solutions By City Officials To Fix Kankakee Illinois Pension Debt Shortage
Kankakee is not the only city that has a major pension debt shortage.
- The pension debt crisis exists in most Illinois municipalities
- City officials are confident and optimistic they can fix the pension financial crisis
- Like most Democrat-run governments, the City Council raised the city’s sale tax by 2% last year
- This supposedly bright idea by city officials was proposed to avoid another property tax increase
- City officials hoped the 2 percent sales increase would raise an extra $7 million in revenues
- The $7 million surplus by increasing the sales tax was allocated to fund the pension shortage
The city did see an increase in revenues in the first quarter. However, critics are fearful of taxpayers leaving the city. Many Illinoisans have left and/or are thinking of leaving the state due to high property taxes and other taxes in Illinois.
Other Bright Ideas By City Officials In Fixing The Financial Crisis
Kankakee is not alone with mounting debts they have no means in paying.
- Other local and county governments are struggling with the same problem
- Property values are declining while property taxes are rising
- Illinois has the second-highest property tax rates in the nation right behind New Jersey
- Experts expect that Illinois will surpass New Jersey by mid-2020 as being the highest property taxed state in the United States
- Kankakee Mayor Chasity Wells-Armstrong is grabbing for straws to keep taxpayers at ease
- She recently told residents that the City will be fine
- The Mayor announced that the city will be raking in revenues from marijuana sales which the state approved will be effective on January 2020
- Tax proceeds from marijuana sales will go to the police and fire pension fund
- The Mayor seemed optimistic that there will be a surplus with tax revenues from marijuana sales that it can reduce the $35-per-year vehicle sticker fee, which she said hit poor families particularly hard
The Mayor also wants to increase taxes from video gambling machines for extra revenue.
Dangers Of The City’s Financial Crisis
It seems like the Mayor and members of the City Council have no immediate solutions in the rising pension debt shortage.
- Besides, pension debt, the city is short and barely meeting their other financial obligations like most Illinois communities
- The pension fund needs to quit bleeding and stabilized
- The property taxes have been going up year after year with no caps
- This is making property owners very nervous
- The bond rating for the city and state is expected to be downgraded which is a very bad sign
- The sales tax increase has helped somewhat but it is by no means solved
- Police officers contribute over $500,000 annually to the pension fund but the shortage keeps on increasing
Analysts and experts say the Kankakee Public Safety Pension Fund is hands down the worst-funded fund in Illinois.
How To Avoid The Pension Fund From Going Bankrupt
Basic business sense is not how much you make but what you spend. This is one of the reasons why Illinois is so broke. There is no reason why city, county, state governments should be broke. Raising taxes is not the solution. Raising taxes can backfire big time because it can lead to taxpayers fleeing the state. Illinois is currently experiencing an exodus of the resident to other lower-taxed states such as Tennessee, Kentucky, Florida, Texas, Georgia and dozens of other lower-taxed states. Lawmakers and government leaders need to cut spending. They need to run government like a business. Privatize everything you can. Keep salaries and benefits to a minimum. You cannot give in to labor unions. Labor unions want everything from higher salaries to the best benefits for their members. To run a profitable institution, you cannot splurge and need to run a slim budget operation. Illinois is a great state but is currently under a state of emergency due to its financial crisis. Gustan Cho Associates Mortgage News will keep our viewers informed with upcoming developments and latest news.