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North Riverside firefighters: We'll fight privatization bid

Village to seek tax referendum, cost cuts

June 27th, 2014 9:12 AM

Updated: Jun. 27th, 2014 6:07 PM

By Bob Uphues

Editor

 

The attorney representing North Riverside's firefighters on Thursday said that if the village insists on moving ahead with its plan to privatize fire protection services, the union would fight the attempt in court.

"They can't do this," said J. Dale Berry, who represents North Riverside Firefighters Union Local 2714.

Berry said state law prohibits municipalities from hiring public safety officers who have not undergone rigorous civil service testing to which firefighters and police officers submit.

"It substitutes qualified people with wannabe people," Berry said. "We can negotiate an arrangement that will meet their costs."

Firefighters at a June 24 contract negotiation session proposed saving money by beginning to train its firefighters as paramedics and eliminating the need for North Riverside to pay a private company for paramedic services. The plan came with a proposal to hire three firefighter/paramedics to get the ball rolling.

The village maintains that such a solution only increases its pension obligations. But firefighters also rejected the village's privatization proposal, which was offered at the same meeting.

"If it's a serious proposal, they don't know the law," said Berry. "If it's a bargaining tool, it doesn't impress us."

But if the village insists on moving forward with its plan to obtain firefighter services from Paramedic Services of Illinois (PSI), Berry said that matter will end up in court.

"Then we'll just have to litigate it," said Berry, "and we'll win. The real solution is to sit down and negotiate like we have."

North Riverside firefighters are currently working without a contract. Their most recent deal with the village expired April 30.

Berry's statements came following North Riverside's hearing Thursday afternoon before the Illinois Department of Insurance. The village faces draconian sanctions for failing to fully fund its police and fire pension obligations over more than a decade.

Information entered into the record at the hearing showed that North Riverside failed to contribute anything to its pension funds in six of the past 14 years, and in six other years failed to contribute the 90 percent threshold the state requires.

A state law allows the Illinois comptroller, beginning in 2016, to deduct funds from other state revenues, such as sales taxes and other shared taxes, to force the village to comply with pension funding laws.

Since sales taxes and state shared taxes are the lifeblood that funds the majority of North Riverside's general operations, such a move would have deep impacts on village services.

During the nearly two-hour hearing at the Department of Insurance's office in downtown Chicago, North Riverside laid out its reasons for why it failed to fund pensions sufficiently as well as its plans to fund them in the future.

Among the bombshells dropped during the hearing was news that North Riverside would seek a property tax increase from voters in November in order for the village to make its required contributions for police pensions in the future.

According to North Riverside Village Attorney Burt Odelson, the referendum will essentially ask voters to approve tripling what local property owners pay in real estate taxes to the village.

Because the village has frozen its property tax levy for a quarter of a century, North Riverside's take of homeowners' property tax bills is a mere fraction of the total — on average about $250 per residence. A successful referendum would make that about $750, said Odelson.

In addition to the referendum, there will be cuts to services. North Riverside Finance Director Sue Scarpiniti, who testified at Thursday's hearing, said the village board is looking to make cuts to the budgets of the police and other departments.

A schedule of those cuts provided to the Landmark on Friday indicates that the village board will seek to cut police overtime by $100,000. In addition, the board plans "salary reductions" for the code enforcement, administrative and public works departments totaling $90,000. On top of that, the village is asking departments to trim an additonal $192,000 from their combined budgets for the 2014-15 fiscal year.

On the revenue side, the village is projecting to collect $100,000 in fines related to the red light camera recently installed at Harlem Avenue and Cermak Road.

The village last week raised water rates and imposed a water operations surcharge in order end the longtime village subsidy of water service to residents and businesses. The average homeowner will see his water bill increase by about $400 annually due to the increase, Scarpiniti said. Homeowners paying minimum bills will see those charges increase by about $220 annually. 

The cuts, water rate increases, the property tax increase and privatizing the fire department would save the village about $1.1 million in fiscal year 2014-15, which began May 1. But that's still well short of the $1.9 million deficit the village projects in its operating fund during that period.

The difference would be made up by spending cash reserves, said Scarpiniti.

Members of the village's board's finance committee are scheduled to meet Monday, June 30 at 6 p.m. to discuss the future steps.

A second bombshell revealed at Thursday's hearing was news that on June 20 Moody's Investors Services, which rates the credit worthiness of municipalities, downgraded North Riverside three levels from A1 to Baa1 and assigned the village a negative outlook.

Moody's pointed specifically to the village's pension situation, its unfunded post-employment benefits liability and its dependence on sales taxes for revenue as reasons for the downgrade.

Such a credit rating, said Scarpiniti means that any future debt would come "at a substantial financial cost to the village," making it "unaffordable" for the village to refinance existing debt or issue new debt.

Both Odelson and Berry urged the Department of Insurance not to impose a solution — in particular the deduction of sales taxes and state shared taxes for pension purposes — which would make it more difficult for North Riverside to deliver services to its residents.

Odelson questioned why the state was singling out North Riverside, when "our deficits are similar to hundreds of municipalities across the state."

He pointed to the city of Chicago and to the state itself as examples of other agencies whose pension problems dwarfed North Riverside's.

"North Riverside pales in comparison," Odelson said.

Berry said that while North Riverside's level of pension funding may not be much different than many municipalities in Illinois, "what they did that was provocative was that they didn't make any payments" for six years.

Still, Berry said, a draconian solution by the state would help no one in North Riverside.

"It's inexcusable that they didn't make those [pension] payments, "said Berry. "But the remedy isn't to throw the baby out with the bath water. It's not going to help us or help our citizens."

Louis Butler, the Illinois Department of Insurance deputy general counsel who presided over Thursday's hearing, indicated it would be at least two weeks before he submits a recommendation regarding possible sanctions to the director of the department. 

This story has been changed to clarify the nature of the cuts to village services that will be proposed at the Monday, June 30 meeting of the village board's finance committee.

Contact:
Email: buphues@wjinc.com Twitter: @RBLandmark

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