Excerpts from the ChicagoTribune.com:
Lake Zurich officials are preparing for substantial increases to cover police and fire pension obligations, as they deal with low investment returns and the fact that officers and firefighters are living longer.
But Lake Zurich homeowners shouldn’t see a direct effect when they go to pay their property tax bills, although money for other village services could be constrained to cover pension costs, said Finance Director Jodie Hartman.
Other Illinois municipalities are dealing with a similar dynamic. Lake Zurich trustees recently heard from fire and police pension board members about proposed increases of 17.6 percent and 14.4 percent to their fire and police pension levies, respectively.
“Being that we are a non-home rule community, the required levy amounts will be absorbed within our capped levy,” Hartman said. “The only impact to taxpayers is indirect, as it will reduce funding available for other services provided by the village.”
Village board members are expected to approve their overall annual property tax levy, the requested amount Lake Zurich wants to collect in property taxes, during a meeting Dec. 5. State law caps Lake County taxing bodies’ annual levy requests to 5 percent, or the rate of inflation — whichever is less, according to the Illinois Department of Revenue.
Even with a proposed 14.4 percent increase to fund police pension obligations, village expenses in the fund only will be 43.1 percent funded, a decrease from last year when pension expenses were 44 percent funded. Lake Zurich is required by law to fund at least 90 percent of both pensions by 2044.
Fire Pension Board Secretary Eric Ryan also appeared before trustees to request a $2.1 million increase, up 17.6 percent from last year’s actual levy of $1.8 million, Ryan said. Expenses in the fire pension fund will be 60.6 percent funded under the proposal, up from 58.4 percent funded.
Lake Zurich was able to increase funding for the fire pension — and not the police pension — because of various factors, including different laws for calculating police and firefighter fund requirements.
Each fund also covers a different composition of members who are active or retired, Hartman said. Each fund also has its own board, which makes its own investment decisions that can affect returns, she said.
Municipalities face various challenges with funding pensions, including substantially low investment returns since the Great Recession and increases in mortality among retirees, said Village Manager Ray Keller.
