No one likes to pay property taxes. When you pay them, though, you might be comforted by the fact that the money goes toward critical public services.
For instance, the city portion of your bill, you might reason, funds needed services such as police, fire protection and street maintenance.
You would be right, but you’re missing a big component.
Would you be surprised to find out that a large portion of your money funds pensions? I was.
Rock Falls recently reported that 47 percent of its property tax levy is devoted toward its contributions to the police, fire and Illinois Municipal Retirement Fund pensions. In Sterling, that cost is 41 percent.
Dixon, which has different circumstances, directs 25 percent of its property tax revenue to pensions. For years, then-Comptroller Rita Crundwell levied too much property tax revenue for the IMRF, Finance Director Paula Meyer said. As a result, the city levies nothing for that fund these days.
While the pension costs seem steep, it’s important to note that property taxes make up only a portion of a city’s general fund revenue. Other sources fund things besides pensions.
In Sterling, for instance, property taxes make up a little less than a quarter of the revenue for the general fund, which pays for operations of most city departments. Sales taxes make up the biggest part at 38.3 percent, while state income tax revenue comes in third at 14.1 percent.
Still, property tax bills have a bigger emotional impact on people. Sales taxes are paid in small chunks, and income taxes go to Springfield. Property taxes come with annual sticker shock.
You might wonder why such a big proportion of your property taxes goes to pensions at a time when most private sector workers no longer have such a perk.
Many government employees, however, support the current system. For cities around here, most of the pension levies go to retired police officers and firefighters. Those expenses, some might argue, should be lumped into the costs of having police and fire protection. People might take those relatively low-paying, dangerous jobs knowing that at least they’ll get a pension when they retire.
That’s true. Still, I was surprised at how much property tax revenue goes toward pensions. Are you?
David Giuliani is a news editor for Sauk Valley Media. You can reach him at email@example.com or 800-798-4085, ext. 525. Follow him on twitter: @DGiuliani_SVM.