Peoria City Council breaks pension gridlock with excess revenues, passes biennial budget
The Peoria City Council passed the 2022-2023 biennial budget after a majority secured funding pension obligations, breaking weeks-long gridlock.
Before the vote, City Manager Patrick Urich gave the council a brief synopsis of budget expenses, stating the use of $262.3 million for 2022 expenses and $242.2 million in 2023.
“In both years, our fund balance does decrease by $6.9 million in 2022 and $4.9 million in 2023,” Urich said. “Predominantly in all of our capital funds, as we use and spend down capital reserves that have been built up due to the pandemic and curtailing of capital projects due to the pandemic.”
The final hurdle to pass the budget was the unfunded obligations for police and fire pensions in 2022 and 2023. Urich reminded the council of the city’s five options on funding the mandated dues that were either voted down or left on the council table.
Urich said he feels the general fund financial performance is improving.
“First and foremost, we think the 2021 budget that we’re in today… we originally anticipated that the budget would see an increase in fund balance of $1.1 million,” he said. “The budget that we presented (that is) projected for this year showed an improved financial performance of $10.8 million. Over a $9.7 million increase in fund balances and that also included a transfer of $8 million out of the general fund into our capital fund...in order to shore up the deficit in our capital fund.”
Urich said the general fund performance will likely be closer to $17.7 million. A number of reasons, according to Urich, include recovery from the pandemic, state-shared revenues are significantly higher, and local-based revenues are growing. Urich mentioned $10 million of the American Rescue Plan funding going into the general fund to cover expenses as a fourth reason.
“...(We) can use these revenues to cover the pension obligations that we have in future years,” said Urich, answering a question by Mayor Rita Ali. He said the unrestricted, unreserved fund balance in the general fund will be around 20.1%. But if the full $6.9 million arrives into the general fund, it would move to 27.4%.
The council passed a motion to use $4 million of 2021 excess revenue to fund pension obligations, meaning the estimated general fund percent would fall to 23.1%, about $1.8 million under council policy. Urich said the council would only need about 2% of spending or revenue growth to close the gap.
Third District council member Timothy Riggenbach, stating his financial advisor background, said the projections are likely to be correct as the timetable is near completion.
“I don’t want to create a false scenario here, we’re not coming up with a grand solution to the pension issue, but we are addressing the issue at hand,” Riggenbach said. “Which our action of sun setting the (public safety) pension fee created this $4 four million gap for the next two years... If our revenues are that significantly higher then I can pay ahead the next two years with this year’s revenue — that seems like a great stopgap measure.”
Fifth District council member Dennis Cyr asked Urich if he still feels optimistic about the revenue prediction, saying many businesses are struggling with reduced staff and hours.
“I’m optimistic about the current year’s revenues and I think as we look ahead hopefully there is a couple of factors that we’ll have to certainly look at and that’s we wanna make sure we can get as many people employed as we can,” Urich said. “The employment numbers in October were better than I think they were anticipated to be, so that was a good step. And I think overall from our region we have a lot of open jobs right now, hopefully, we can get people back to work.”
Urich mentioned the increase in capital projects and the additional future funding will create a “spinoff” effect that will affect service-level jobs as well.
Fourth District council member Andre Allen said the pension funding option is not ideal, but necessary to complete the budget.
“We’re able to fulfill our pension obligations and we are able to do that without cutting public safety,” Allen said. “We are able to restore more jobs that were lost to COVID-19. So this is the right budget proposal for the right time.”
Not every council member was supportive of the motion using $4 million in general fund excess revenues to pay pension obligations.
At-Large council member Zach Oyler said Riggenbach’s statements on the measure were “disturbing.”
“‘Use this year’s revenue to pay next year’s bills — that is a path to disaster if I ever heard one before,” Oyler said. “I can’t support this motion because it does not prepare us for the future. It’s the same motion essentially that we had last week just with a few more chips on the ole’ Poker table. Saying that we are going to burn down reserves to pay our bills and tying it to the pension decision is unacceptable, too. Because those two things have really nothing to do with each other. The pension money should have never been budgeted, to begin with, because it was voted on to sunset. It shouldn’t have been in here. If council wanted to vote in advance to put it back in, then they could’ve done that.”
Second District council member Chuck Grayeb said the council will not solve all the issues, but will send a message to those terrorizing the city.
“This is almost an unprecedented funding for public safety resources, which those of you who vote for this will be sending a strong message that we mean business and not going to just talk public safety — we’re gonna fund it,” Grayeb said. “We’re going to give relief to the people in neighborhoods who have suffered too long as a result of a pandemic and a result of some of the violence that we have seen way too much of.”
At-Large council member Beth Jensen said the city is being responsible by using excess revenue to fund pension obligations , stating her disagreement with Oyler’s viewpoint.
“Once we pay that $4 million, then it’ll be 23.1 percent (in the general fund balance), but that’s more than what was in the proposed budget,” Jensen said. “It’s a substantial amount. It’s more than what we had in reserves since I’ve been on this council, and that’s been eight years.”
First District council member Denise Jackson echoed her colleagues’ phrasing of the option not being the best, but a good measure to pass.
“I will support this, given those numbers (2021 excess revenue) that we’re seeing tonight. I think this helps us. We’re in a position to maintain our public safety at a time where we most critically need it, given the surge in crime we’ve seen in recent months,” Jackson said.
At-Large council member Sid Ruckriegel, who was online for the meeting, joined Cyr and Oyler in voting against the pension obligation funding option.
The same council members also voted against the final approval of the budget that passed on a 8-3 vote.
“I just want to thank our city manager for all your work on the budget,” Ali said after the final vote of the night. “I know I strolled past many nights and saw your light on and I assume (finance) director (Kyle) Cratty was sometimes in there with you working hard. Thank you for all your efforts and for your entire team. Much appreciated.”
The council will meet again on Dec. 14, but you may see some members at the 134th Santa Claus parade on Friday.
“This is the longest ongoing parade in American history,” Grayeb said. “We’ve done it through depression, recession, World Wars — even during the pandemic we kind of reversed things around. I know this is something that our people take great pride in and I think we are all looking forward to that parade.”