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Pekin City Council approves a new 5% utility tax and increases fees 'to put the failures of the past behind us'

Pekin City Council and city staff press on during the final hour of a four-hour council meeting Monday.
Steve Stein
Pekin City Council and city staff press on during the final hour of a four-hour council meeting Monday.

The Pekin City Council took three steps Monday aimed at putting the city back on its financial feet.

Each step approved by the council during a draining four-hour meeting will cause city residents, businesses and other taxing bodies to reach deeper into their pockets.

A new 5% utility tax was approved 4-3. Mayor Mary Burress and council members John Abel, Karen Hohimer and Chris Onken voted yes. Council members Rick Hilst, Dave Nutter and Lloyd Orrick cast the no votes.

A proposal to raise the city's garbage collection fee passed by the same vote. A proposal to raise the city's wastewater and storm water collection and treatment fees passed 5-2, with Hilst and Nutter dissenting.

Hilst wasn't happy about the actions approved by the council.

"We've done a good job of throwing the taxpayers under the bus," he said.

Burress, who made a campaign promise not to vote to raise fees or taxes, said she had to change her mind when she learned about the city's money woes.

"When I first heard about these proposals, I said no, no, no," she said.

"But years of deep and very wide spread malpractice and neglect by prior administrations who were whistling past the graveyard has put us in this precarious position.

"It's time to put the failures of the past behind us and confront our issues head on," she said. "That's why all of us up here were elected, to make tough decisions for the greater good.

"I believe Pekin has a bright future. We're on a path to prosperity and growth. This city needs to be run like a business, and that's what we're going to do."

Onken said he also was adamantly opposed to the proposals at first, but when he ran some numbers past "someone smarter than me, my wife, who is a numbers person," he changed his mind.

During public comments, resident John McNish said city staff needs to look for cuts.

"We asked our department heads to make cuts to get us out of the hole our former finance director put us in, and they've done that," Hohimer said.

Those cuts amounted to $5 million in the 2024-25 fiscal year budget, which was approved Monday by a 4-3 vote with Hilst, Nutter and Orrick voting no.

The budget contains an $11.81 million deficit, with revenues of $105.22 million and expenditures of $117.03 million.

The cuts Hohimer mentioned include not hiring for two positions, reducing fleet replacement to a bare minimum to remain operational, according to City Manager John Dossey, delaying the next phase of the Derby Street reconstruction project and most downtown street improvements, and trimming business assistance grants by 34%.

The city's financial problems mainly involve a combined sewer overflow project mandated by the Illinois Environmental Protection Agency, and a consent decree issued in response to a federal class-action lawsuit filed in 2018 by Pekin residents who complained that the city's pedestrian walkways were largely inaccessible for people with mobility issues.

Each mandate will cost the city hundreds of millions of dollars over several years.

To make matters worse, "I discovered there were structural issues within the budget that weren't allowing the city to address those mandates properly," said interim Finance Director Bob Grogan.

Dossey, who became city manager in November, said another financial issue is the city's past payments to the police and fire pension funds were too low at approximately 95%. Raising the payments to 100% has added about $1.2 million in spending to the budget, Dossey said.

The new utility tax, which goes into effect May 1 and be collected by utility companies, covers natural gas, water and electricity.

Natural gas and water bills will be taxed at 5%. Electricity bills will have a tiered taxing system based on usage.

A resident with average utility usage will pay an additional $10 per month because of the utility tax, according to Dossey. Orrick calculated he'll pay an additional $13 monthly.

A cap of $250,000 annually for a taxpayer was put in place to help high energy users, which tend to be large employers.

City staff estimates the utility tax will raise $4 million in the 2024-25 fiscal year. Dossey said those funds will address an expected $5 million shortfall in the 2024-25 budget's general fund.

Dossey noted that many medium to large communities in the area have put a utility tax in place including Peoria, Galesburg, Bloomington, Normal, Champaign, Urbana, Rockford, Moline, Rock Island and Decatur.

Pekin's garage collection and wastewater and storm water fees had not been raised since 2018. Proposed increases were delayed by the council because of the COVID-19 pandemic.

That has resulted in the solid waste fund owing $1 million to the general fund and the sewer fund owing $11 million to the general fund.

The $20 monthly garbage collection fee will go up to $25 on May 1 and increase $1 per year through 2029.

The volumetric rate for wastewater and storm water will go up from $7.66 to $10.70 per 1,000 gallons of water used monthly on May 1 and increase by 5% annually.

The monthly wastewater and storm water capital improvement fee will go up from $4.41 to $4.90 on May 1 and increase by 5% annually.

An estimated $708,600 will be raised in the 2024-25 fiscal year by the increased garbage collection fee.

"Aside from covering regularly increasing expenses, the additional revenue from the garage collection fee increase will be used to pay back the money the solid waste fund owes to the general fund and pay capital costs (like the purchase of garbage trucks) previously paid with general fund dollars, " Dossey said.

The projected revenue from the wastewater and storm water fee increases is $2.38 million in the 2024-25 fiscal year.

Those funds will cover increasing expenses and pay back the money the sewer fund owes to the general fund, Dossey said, help pay off the EPA loan debt service for the mandated CSO project, "and create a true preventative maintenance program to be more financially responsible over time."

Grogan said a finance team made up mostly of city staff will be formed to dig deeper into the city's finances and provide regular reports to the council, which has asked for more frequent and detailed reports.

Non-union employees get a 3% cost-of-living pay hike

Pekin's non-union employees were granted a 3% cost-of-living pay increase for the 2024-25 fiscal year Monday. The council vote was 5-2, with Hilst and Nutter voting no.

"While the city's budget is under pressure, it's still imperative to maintain competitive pay and benefits to avoid the much more damaging effect of losing skilled employees," Dossey said.

Hilst said the employees deserve the raise, but the city can't afford it.

Burress praised city staff "who were doing two or three jobs to keep us going," during a recent stretch of vacancies.

Plan to fix non-compliant pedestrian walkways approved

A transition plan mandated in the pedestrian walkway class-action lawsuit consent decree was approved unanimously Monday by the council and will be submitted to the federal judge adjudicating the case.

Prepared by the civil engineering firm of Thouvenot, Wade & Moerchen, which has a Peoria branch, the plan prioritizes the replacement of pedestrian walkways that are not compliant with the Americans with Disabilities Act.

The consent decree requires Pekin to spend $1.5 million on ADA upgrades by April 30, 2026 and a minimum $250,000 per year afterwards to fix the ADA problems.

Seventy-five percent of the city's sidewalks and 70% of its ramps are currently non-compliant, according to the plan.

Steve Stein is an award-winning news and sports writer and editor. Most recently, he covered Tazewell County communities for the Peoria Journal Star for 18 years.