Pension reform tops mayor’s priorities
By Stuart R. Wahlin
For those who hadn’t picked up on Rockford Mayor Larry Morrissey’s (I) frequent laments regarding the need for pension reform previously, the message was difficult to miss as a recurring theme during his fifth annual State of the City address at the Coronado Theatre March 4.
“The most difficult challenge facing us, and the greatest threat to our financial ability to carry out our duties, is the horrendous pension liability saddled upon us by the state,” Morrissey told about 600 in attendance. “Without immediate pension reform, by 2011, 41 cents of every property tax dollar you send to the city will go directly into retiree pensions. Those dollars don’t help us meet any of our current needs. It’s not right, it’s not fair, and it’s crushing us.
“If a firefighter or police officer is hired at the age of 25 on Jan. 1 of this year, under the current rules and contracts, and with a modest 3 percent cost-of-living annual adjustment assumed, and no promotions, that employee will pay into their pension around $300,000 over the course of a 30-year career,” he explained. “Now, when that employee retires at the age of 55, how much do you think that the taxpayers will be obligated to pay that employee and their spouse over the course of their retirement? Well, the annual payments over those 30 years will be $5.8 million. My guess: That’s probably far in excess of any guaranteed return that any other folks in the private sector could expect.”
Following his speech, the mayor told reporters, “We would be better off if that 55-year-old, the day they’re retiring, we handed them a check for a million dollars.”
As a result of its obligation to provide annual raises for retirees, Morrissey said the city is being forced to cut its existing public safety personnel.
Morrissey told The Rock River Times: “If the stock market goes to hell in a hand basket, we still have to make the payments. And who’s guaranteeing it? We are. And what happens to the existing employees that we need to have hired to protect our city—police or firemen? We may have to lay them off so we can pay for 3 percent annual increases for retirees who retire in their early 50s. And with health care advances and the fact that a hundred percent of the benefit goes to a spouse if the employee dies—if somebody lives to be a hundred years old, you just start to see the numbers grow exponentially. So, we’ve got significant, significant challenges that aren’t totally in our control.”
Morrissey indicated pension reform is the single-biggest legislative priority for the city in Springfield.
“This is not fiction. This is a real obligation,” he added. “We simply cannot afford this unfunded mandate. It will lead to the insolvency of cities across the state of Illinois.”
Morrissey said the “elephant in the room” can no longer be avoided, and citizens must urge state legislators to change the system.
“They need to know that this will be an election issue come November, and votes will be based on this issue,” he asserted. “It’s simply that important.”
During closing remarks of the address, the mayor said: “So, when it comes to pension reform, when it comes to collective bargaining, will it be tough? You bet. Are our backs against the walls? Yeah, no doubt. But I like our chances.”
Budget, finance and operations
The mayor reported the city is at its lowest spending level since 2006. Meantime, non-union city employees have undergone a 3 percent pay decrease through furlough days, the garbage collection fee was increased, equipment purchases have been eliminated from the budget, and a hiring freeze has been imposed on open positions. Additionally, the city laid off 26 employees in 2009, while about two dozen municipal library employees have also been let go after the city pulled its longstanding annual financial support.
Despite the adjustments, the city is still in over its head.
Finishing 2009 with a deficit of about $4.5 million in the face of slumping revenues, and with the unemployment rate in the Rockford metropolitan area being the state’s highest at 16 percent, Morrissey said all facets of city government are on the table in an effort to cut costs while creating jobs in the community.
The mayor warned if the city doesn’t change its ways, it could face a $40 million deficit by 2015.
To avert that, the mayor lauded the efforts of a budget and finance advisory committee led by private sector business leaders. The group’s recommendations, first presented to aldermen in January, proposed several long-term fixes to what ails the city, including the needs for pension reform, outsourcing, greater strides in collective bargaining, and intergovernmental cooperation to improve efficiency.
Morrissey reported the city saved approximately $1 million by relying less on private contractors for snow removal, while also reversing the city’s 2005 insurance fund deficit of $2.8 million into a $2.1 million surplus through a variety of means, including higher deductibles and co-pays more in line with the private sector.
The mayor said the city’s green initiatives will also pay off by decreasing expenses. Aldermen recently approved an energy audit of city buildings, which will be performed this year.
“Make no mistake: we have no choice but to shrink our government in both cost and in size,” he said during introductory remarks. “We must leverage our citizens’ contributions so that we only employ the level of government that we can afford. No more. But we cannot withdraw. We cannot fail to invest. We must build the infrastructure and amenities that will grow jobs, keep our jobs, and help us to create new jobs. This is the new way of doing business.”
Morrissey said the new business model “relies completely on our ability to connect to our citizens” through transparency and public involvement.
“We can’t expect to solve our woes by raising taxes to pay for old bills. That would be the wrong medicine for our families, the wrong medicine for our businesses,” Morrissey added. “Our citizens are hurting. Our citizens are out of work. Our citizens rightfully demand that we manage our costs and maintain our service levels without raising taxes.”
Capital improvements and downtown investment
Since approval of the 2007 Rebuilding Rockford referendum, a 1-percentage-point sales tax increase, Morrissey said the city has been diligent in its efforts to make good on its promise to improve roads and other infrastructure on a pay-as-you-go basis.
“Through that disciplined effort, we have been able to retire significant property tax-based debt, and our property tax rate has declined accordingly,” he asserted.
The mayor also applauded the city’s investment in stormwater management and its $75 million water system upgrades slated for completion next year.
He noted federal stimulus funding has provided for additional investment. Most importantly, he noted, was the state’s passage of its first capital plan in a decade, calling it “the most robust state infrastructure plan our community has ever seen” for projects like rebuilding the Morgan Street bridge, as well as West State and Main streets.
All told, the mayor said more than $250 million from the capital plan will be invested in Rockford during the next five years.
“That means immediate construction jobs and long-term economic health and recovery,” he added. “With this much money at stake, we have the chance to truly remake much of our urban core. We need to build those livable, walkable and attractive roadways, commercial districts and neighborhoods. This is what the best cities are doing.”
Additionally, the mayor noted, the city will benefit from the state’s $60 million investment to return passenger rail service between Rockford and Chicago.
With Rockford’s train station downtown, Morrissey pressed the need to keep investing in the area. He cited the recent removal of the Main Street pedestrian mall as a step forward, while emphasizing support for the riverwalk project, as well as doing away with downtown’s one-way streets. Aldermen recently approved a $150,000 study to explore the returning of two-way traffic to streets like Main and Church.
Because of the slumping economy, however, many constituents have argued now is not the time to pursue costly projects such as the riverwalk, mall removal or traffic studies.
Asked by this publication to respond to these arguments, the mayor asserted, “Now is the absolute right time.
“We want to grow jobs. You don’t grow jobs, if you’re sitting on the state’s highest unemployment rate, by sitting back and doing nothing,” he argued. “Now, you have to be wise about how you invest. You can’t waste money like we’re currently doing in this out-of-control pension system and some of the other crazy rules we’ve had, which have been wasting money out of our general fund. But when you’ve got dedicated capital funding sources like we’ve had, when you’ve got these ITEP [Illinois Transportation Enhancement Program] grants that, if we don’t use ’em, some other community will use them, we would be moronic to not take advantage of it.
“The fact of the matter is what we’re seeing happening right now—I use the analogy of a stroke victim recovering,” the mayor explained. “We’re coming out of a real tough period. We didn’t have enough oxygen and blood getting to the brain, so we kind of collapsed in our downtown—collapsed, some would say, in the whole city, not having a heart in our downtown. I think what we’re starting to see is we’re creating the new, I guess a physiologist would call it some new neural routes. We’re reconnecting.
“Amid all the challenges, if you look nationally, one of the things you’ll find is that the type of growth that’s truly dead right now when it comes to real estate development is sprawl,” Morrissey added. “The interesting thing is there’s a whole new opportunity for this urban core redevelopment. And it happens to be, for us, there’s a number of grants that can only be used downtown.”
Asked by The Rock River Times Editor and Publisher Frank Schier why the city is spending $150,000 for a one-way street study instead of using the funds to begin implementing a return to two-ways, Morrissey explained: “I would love to not have to get approval from the State of Illinois to make those one-ways two-way again. Unfortunately, the state looks at it from this perspective: ‘It’s working fine. We’re not doing it. We’re not gonna change it unless you justify it.’
“We have to deal with the world that we’re in. I’m a pragmatist. You know, I could wring my hands all day and say, ‘We’re not gonna pay it,’ and what would happen? Nothing. I don’t want that to happen. I want to do something,” he argued. “We will transform West State, South Main, North Main, Kishwaukee, all these major state highways and corridors. It’d be unfortunate if we made all these improvements to get to downtown, and then the one-ways strangled us.”
Morrissey also announced the formation of another advisory group to focus on long-term civic design standards. The group will be led by Mike Paul, director of construction operations for SupplyCore, Inc.
According to a Jan. 20 semiannual D-2 report of campaign contributions and expenditures, Morrissey’s campaign, “Citizens for Morrissey,” owes $28,700 in debt to SupplyCore, Inc. The debt is in relation to loans given April 1, 2005 (original amount was $20,000) and May 23, 2005 (original amount as $13,500). Citizens for Morrissey has paid a total of $4,800 toward the debt.
Another advisory group, scrutinizing downtown venues, festivals and special events, released its report and recommendations March 9. The result, Morrissey hopes, will be better coordination and fewer dollars being requested of the city.
Morrissey also reiterated his support for a downtown hotel and convention center.
“This is how we will create even more construction jobs and long-term retail and hospitality jobs, and I’m looking forward to investment announcements soon,” he indicated.
With the Rockford Area Economic Development Council (RAEDC) poised to take over the EIGERlab, Morrissey introduced plans to expand lab operations into the city-owned Ingersoll building, as the Illinois Center for Advanced Technology, to nurture job opportunities and foster growth of new companies. The mayor said federal funding is also being sought to establish the Center for Aerospace Innovative Research in the center.
“This commercial and defense aerospace incubator facility will identify promising entrepreneurial startup aerospace and related high-tech manufacturing companies,” he explained, suggesting the center would attract companies from around the world. “This concept capitalizes on the existing cluster of world-class aerospace companies in our community.”
Through the implementation of GPS systems, new radios and Web-based tools, the Police Department has also improved its efficiency and effectiveness, Morrissey said. He added a recent Crime Stoppers grant has made possible a new video-monitoring system for high-crime areas.
In 2009, Morrissey reported, the city had 21 fewer police officers on its payroll. To counteract the deficiency, he noted a push to place more officers on the streets, instead of behind desks.
“As a result, even though we were down those 21 officers, we were able to maintain effective street force,” he asserted. “In fact, our initial figures show that in 2009 we had the lowest overall crime rate in more than 20 years.”
Although some staffing changes have already been implemented, the city is seeking additional modifications through arbitration and negotiations.
“With the union’s agreement, our city will have an afternoon detective shift and a day-cover shift in patrol which will cover our heavy call volumes more efficiently,” the mayor reported. “We’ve also reestablished our right to hire back officers for less than a full-time shift, and we’ve reduced the number of officers and sergeants that can be on vacation at the same time, which should also help with overtime.”
Morrissey also reflected briefly on the death of Mark Anthony Barmore, an unarmed black man who was shot to death by two white police officers in 2009.
Although the city’s racial divide seems to have widened as a result of the tragedy, Morrissey remained positive.
“The civility and support displayed in the aftermath of the death of Mr. Barmore, the work of our citizens, our police officers, and our local clergy—frankly, it was a very proud moment in a very sad and difficult time,” he said, expressing optimism mediation by the Department of Justice would improve relations between police and the community.
Turning his attention to the Fire Department, Morrissey indicated efficiency has improved by installing laptop computers in department vehicles, while also cracking down on abuse of emergency calls through implementing fines. Additionally, the department began charging for alarm monitoring.
Morrissey also outlined his desire to begin a firefighter cadet program.
“This program will be an excellent recruitment and training tool, especially for minorities that have been historically under-represented on our Fire Department,” he asserted, while noting he’d also like to reinstate a similar program in the Police Department.
“Police auxiliary or cadet support can help with many activities in the city, including parades and special events, parking enforcement, and community and public relations,” he explained, indicating the part-time help would reduce spending.
“That’s why this new cadet program is being examined as a way to achieve cost savings by introducing lower cost approaches to meet our service needs,” the mayor stated. “We believe we can expand public safety and service by delivering and leveraging our full-time force with appropriate levels of volunteer and part-time cadet or auxiliary support.”
He added, “Typically, the costs are lower, because they are paid for part-time work without incurring the same pension and insurance costs.”
To drive the point home, Morrissey noted 70 percent of Rockford’s firefighters live outside of the city in communities served by similar approaches.
Because of state law, such a change must be agreed to by the union, however.
The mayor said he strongly supports privatized ambulance service to better handle the department’s resources and costs.
Of about 18,000 calls for service in 2009, he reported, only 280 were for structure fires.
“Historically,” he explained, “our department has been organized to fight fires, yet our main business today is responding to emergency medical services. We have 13 companies designed to fight fires, but only five ambulance companies. That’s why we end up driving $450,000-$600,000 fire apparatus vehicles to ambulance calls.”
The resulting depreciation and fuel costs, as well as wear and tear on city streets, are too much to bear, he added.
“My wife and I know that there is no better place in the entire world to raise our children than Rockford, Ill.,” Morrissey asserted.
Arguing education is the key to job growth and prosperity, Morrissey announced the appointment of Dr. Rudy Valdez, a senior manager for Hamilton-Sundstrand, as the city’s education liaison and chairman of a community education advisory group. Valdez will serve in a volunteer capacity. Morrissey’s hope is that Valdez will help to strengthen partnerships with Rockford’s educational institutions.
The mayor also stressed a commitment to safety in Rockford’s public schools, urging students and staff who feel threatened, or have been assaulted, to contact police.
Despite recent violence in the schools, as well as drug and weapons charges, the mayor touted several positive developments, including the opening of two charter schools, with a third set to open in September.
“Charters are part of a larger, national school reform movement that will no longer accept excuses for school failure,” he indicated. “In fact, just this week, President Obama outlined his proposal to offer $900 million in school turnaround grants to states and school districts willing to take aggressive steps to turn around or close failing schools.”
To qualify, districts must be willing to either fire the principal and at least half of the staff at a failing school, or to close the school completely.
Morrissey also encouraged support of an education reform bill at the state level that would lift the cap on the number of charter schools, and another that would start a school choice program, which would provide vouchers for parents to transfer their children out of failing schools.
For the 2009-2010 school year, Morrissey noted, District 205 has walked away from the city’s truancy citation and court program used the previous year, opting instead to try its own truancy intervention program. The mayor, however, asserted his willingness to resume issuing citations if the district’s Truancy Intervention Center falls short of expectations.
Morrissey remained optimistic for an affordable city university program through partnerships of the area’s various educational institutions.
“If we are to create jobs and reduce unemployment over the long term, the path we have to follow is becoming crystal clear,” he argued. “We must become a college town.”
‘War on poverty’
Morrissey applauded the recent creation of the Joint Committee on Intergovernmental Efficiency, along with Winnebago County Board Chairman Scott Christiansen (R), in an effort to reduce costs and improve results through consolidation and by eliminating duplication of human services.
Morrissey pointed to numerous state and federal regulations that bind local governments in bureaucratic “red tape.”
“We have become impossibly entangled in this web. For starters, the city is considered what they call an ‘entitlement’ community. That means that, frankly, we’re so large and so poor that we’re automatically ‘entitled’ each year to a certain amount of federal and state monies,” he explained. “But the system has become so large and so decentralized that it has become a beast that needs constant feeding. The poor need agencies for basic necessities, and the agencies need to serve the poor to justify continued funding. The system, in fact, has a built-in reason not to change—essentially, to keep that war on poverty always going.”
Morrissey argued the system lacks incentives for people to get out of poverty.
The mayor said he also looks forward to cooperation with other local governments to establish regional policies on a number of fronts.
“If we want to grow jobs, every person must have the best support that we can provide to fulfill their potential, and we can only do that when our leadership is coordinated, and when our leadership is held accountable,” he said.
From the Mar. 10-16, 2010 issue
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