Excerpts the ChicagoTribune.com:
The Harvey City Council unanimously approved a repayment agreement Monday with its police and fire pension funds, effectively resolving a months-long dispute over withheld state tax revenues that Harvey claimed had placed it on the brink of financial collapse and forced it to lay off 40 public safety workers.
The agreement, which apportions previously withheld and future tax revenues between the involved parties until the city’s debts are paid in full, resembles an interim pact reached last month as Harvey scrambled to make payroll and pay for essential services.
The Illinois Comptroller has withheld approximately $3.3 million in sales, income, local use, transportation, motor fuel, replacement and excise tax revenues from Harvey since February at the request of its police and fire pension funds. The funds, which claim the city is more than $23 million delinquent in combined pension payments to them, took advantage of a never-before-utilized state law that requires the comptroller to seize a municipality’s state tax revenues when it’s been certified delinquent in making required pension payments.
It wasn’t immediately clear whether the release of the withheld funds would enable Harvey to bring back any of the employees it let go in April. Multiple police sources said they had yet to hear anything from the city about it bringing back workers as a result of its pension funding agreement and expressed skepticism that it would happen.
According to the comptroller’s office, Harvey will receive about $1.65 million of the $3.3 million that had been withheld since February, with the remainder split between the police pension fund, the firefighters pension fund and a trustee for city bondholders. The trustee is further directed to pay a portion of the funds it receives to the Illinois Municipal Retirement Fund and both public safety pension funds, according to the deal.
Going forward, the comptroller will distribute 35 percent of state tax revenues earmarked for Harvey to the police and fire pension funds until the debts owed to both funds are paid in full. It would take about six years before the city pays down the full $9 million owed to the police pension fund and even longer before it satisfies the firefighters’ $14.2 million claim, but expressed hope that the funds would eventually be made whole.
The deal also makes the pension funds responsible for appointing an actuary to ensure the tax levies used to fund them are set appropriately, because the city had under-levied previously.
