The city’s 2022-2023 biennial budget will stay on the council’s table as members hit a wall on pension obligation funding.
Last week, the city council voted not to extend the Public Safety Pension Fee making a pension obligation hole amounting to $2 million in need of a new revenue plug. The discussion during the council’s Nov. 16 meeting included two new pension payment options - but members either voted down or deferred decisions to next week.
Option five would lower pension contributions by $2.2 million, as well as eliminate the pension fee expenses and ultimately use $1.84 million of excess 2021 revenue to fund obligations. That option was put to a vote and narrowly struck down 6-5 with Councilmembers Dennis Cyr [5th District], John Kelly, Timothy Riggenbach [3rd District], Sid Ruckriegel [At-Large], Zach Oyler, and Kiran Velpula [At-Large] voting against the motion.
City Manager Patrick Urich introduced options four and five with option four reducing the police department’s budget next year, which drew confusion and contention.
Option four would reduce the police budget by $621,000, which prompted numerous city council members to state they don’t want to defund the police. At-Large Councilmember John Kelly asked Urich to clarify why these funds were chosen to be used for pension obligations instead.
“As we [city staff] looked at the staging of the hiring process that there is ten positions that won’t be hired for eight months and there is ten positions that won’t be hired for four months,” Urich said. “That is 120 months of time in this budget, which is about $621,000...we’ve rounded it for the purposes of this...so that’s the amount that’s been built into the budget. If it’s reduced it shouldn’t have an effect on the overall operations of the department.”
Councilmember Riggenbach when discussing the pension funding options mentioned if the $621,000 could be used as overtime instead for the police department. This idea made fourth district Councilmember Andre Allen withdraw his motion to vote on option four.
Option three, which would use excess 2021 revenue and lower pension contributions, was voted down 5-5 with Councilmember Velpula abstaining last week.
Councilmember Ruckriegel had an issue with the current pension funding options.
“You and I may differ a little bit on that because my angst was those reserves really need to be in there and stay in there,” Ruckriegel said. “Those are our long-term security to make sure we don’t have to do massive layouts - and to be using them so quickly. But you presented a budget that scaled out that there is a real use for those in years three...four and five. If they’re not there in years three, four, and five then that picture looks a lot different.”
He went on to say Peoria “is not going out of business in two years,” and mentioned using the excess funds early will only make the forthcoming years harder to budget.
City Manager Urich told Councilmember Ruckriegel that he’s been suggesting the same methods of payment, budget cuts or revenue increases, during every budget discussion in the last ten years.
“The only other option you have then is to cut expenses, but there has been no motion made to cut expenses,” Urich said to Ruckreigel and other council members. “There has been no one that has said ‘We need to cut expenses’ that is your other option… you have one-time revenue that is sitting in the general fund because of increased tax revenue that we’ve received this year.”
As for option one, it would see the budget cut by four million dollars in expenses over two years. And option two would lower pension contributions by two million and see expense cuts around $2.27 million - it is estimated 11 potential hires in the 2022-2023 budget would need to be left unfilled.
Before the council received and filed the budget some of the members voiced support on using four million dollars of excess 2021 revenue to fund complete pension obligations for 2022 and 2023.
Discussions on levying taxes and abating bonds for 2022 and 2023 were deferred along with the budget to Nov. 22 at a special meeting. There is only one regular meeting remaining in 2021 on Dec. 14.
