A. Public Pension Fairness Platform

The cost of providing public safety pensions in Illinois is rapidly overtaking municipal budgets and jeopardizing the future of communities. Without a more fair public safety pension system, Illinois municipalities will either cut the level of public safety and other essential services or face bankruptcy.

Caucus Position: The Metropolitan Mayors Caucus joins its participating suburban Councils of Governments and the City of Chicago in calling for fair and equitable changes to public safety pension systems. The goal is to develop a long term, comprehensive solution to the pension crisis that protects Illinois taxpayers and secures sustainable retirement benefits for public safety employees. The following is an outline of the Pension Fairness Platform called for by the organizations mentioned above:

1. Enroll all new police and fire employees into a modified pension system.

Reasoning: A properly designed pension system will create a sustainable foundation for providing a secure retirement for all current and future public safety employees.

Why It’s Fair: There is precedent in Illinois for adopting modified pension systems. The Illinois Pension Modernization Task Force estimated that adoption of a modified pension system for the five state funded pension systems could produce $53.9 billion in savings over the next 35 years.

 2. Recalibrate current public safety employee pension contributions so that they are in line with the

level of benefits received.

Reasoning: In a sustainable pension system, the employee and municipality contribute equally toward the “normal” pension costs.

Why It’s Fair: Public safety employees can retire as early as age 50 after 30 years service with a pension equal to 75% of their final pay while contributing less than 10% of their pay over the same period. The current employee contribution level amounts to about one-third of the “normal” pension cost.

 3. Consolidate all public safety pension funds in a pooled multiple employer investment system.

Reasoning: Consolidation of all police and fire pension funds into a single investment system would reduce operational costs and provide opportunities for improved investment returns through pooling.

Why It’s Fair: All other municipal employee pensions are already contained in a consolidated investment system (IMRF), providing pension stability through professional administration and pooled investment management of individual local government pension accounts.

A. Public Pension Fairness Platform (cont.)

4. Adopt a 30-year rolling amortization period for the funding of public safety pensions to replace

the current fixed 2033 funding deadline.

Reasoning: Illinois law requiring pensions to be 100% funded by 2033 is arbitrary and not based on financially reasonable actuarial requirements.

Why It’s Fair: A 30-year rolling amortization is more in line with the career span of public safety employees and is a standard accepted by the Governmental Accounting Standards Board. In fact, it is common in many other states.

 5. Require a super-majority in order to approve benefit enhancements in the General Assembly.

Reasoning: Although legislation cannot bind future General Assemblies from action, the threshold for benefit increases for all public safety employees should be raised to a super-majority level in order to discourage future changes while allowing flexibility in extraordinary situations.

Why It’s Fair: Once a sustainable, financially secure retirement system is adopted, future benefit enhancements would only serve to destabilize the system to the detriment of both employees and taxpayers. This should apply to all public safety employee pension systems.

Finally, the Mayors Caucus calls for a moratorium on any further pension benefit enhancement legislation until comprehensive reform of the existing public pension systems is accomplished. To pass any enhancements before a reform package is adopted would be fiscally irresponsible especially under current economic conditions.

B. Municipal Revenues and Unfunded Mandates

The economic recession which continues to plague the entire country has further strained the fiscal health of the State of Illinois. The Governor and State legislators will enter a new legislative session faced with the challenge of coming up with a combination of spending controls and revenue enhancements to resolve a $12.6 billion dollar deficit.

While the Governor and legislative leaders have assured the Mayors Caucus in the past that they will not attempt to go after revenues to which local governments are rightfully entitled, it is imperative that mayors and other municipal officials continue to guard against efforts in Springfield to erode local revenue sources.

Caucus Position: Local governments have their own budget challenges to address in these recessionary times. The State should not create added burdens for them by attempting to manage its budget deficit on their backs. The Mayors Caucus will strongly oppose any legislative proposals which try to reduce local revenues.

The State has also been known to impose unfunded mandates on local governments in the past to solve budget shortfalls. The Mayors Caucus is opposed to any legislation or regulation that creates unfunded or under-funded mandates.

Unfunded and under-funded mandates are intrusive and costly. They generally result in situations where local governments must either cut services or raise local taxes in order to pay for them. The Mayors of

the Chicago region are extremely concerned that the State may choose to expand the use of mandates as one means of dealing with its budget deficit. We strongly urge them not to exercise this option.

C. State Capital Program

The Metropolitan Mayors Caucus applauds the action taken last year by the Governor and the Illinois General Assembly to finally pass a capital improvement program. Maintaining and expanding our road, transit, and freight rail systems as well as committing funds to build and maintain water and sewage treatment facilities, schools, open space, and other necessary public infrastructure will provide a much-needed boost to the State’s economy, create jobs and be a wise investment in our future.

Caucus Position: While a capital bill passed last year, full funding for it, however, has yet to be secured. The 273 Mayors of the Chicago area ask the Governor and the General Assembly to resolve the funding situation as soon as possible so that the State’s capital improvement plan can be implemented without further delay.

 II. Top Federal Priorities

A. Reauthorization of SAFETEA-LU

Action was delayed in Congress last year on legislation which will reauthorize the federal funding programs established in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users adopted in 2005 (SAFETEA-LU) primarily due to the passage of the American Reinvestment and Recovery Act (ARRA). While the ARRA provided a significant investment in the nation’s infrastructure, much of that investment did not reach local governments. According to a recent study by the United States Conference of Mayors (USCM), states benefited most from the ARRA at the expense of cities and metro areas. For example:

• while the largest metro areas account for 73 percent of the nation’s Gross Domestic Product, they received only 48 percent of the transportation funding allocated by states;
• and, the largest metro areas account for 87 percent of congestion costs, but received 48 percent of state funding;
• in fact, the USCM study shows that the three most congested metro regions – Los Angeles, New York and Chicago – account for 27 percent of the nation’s congestion, but received only 6 percent of the funds allocated by states.

Caucus Position: The 273 Mayors of the metropolitan Chicago intend to work with the Chicago Metropolitan Agency for Planning, the Regional Transportation Authority, the State of Illinois, various local governments and agencies and the Illinois congressional delegation to build consensus on a strategy for the next federal reauthorization which will reverse the under-investment cities and metro regions experienced through the ARRA. Because metro areas like Chicago are the engines of the nation’s economy, a major investment in metro area highway, transit and rail systems will help stimulate much-needed economic growth and job creation.

The Metropolitan Mayors Caucus has identified the following strategic principles that its member Mayors recommend be included in any reauthorization legislation:

• increase federal funding levels overall to meet critical needs for rehabilitation and new capacity;
• increase Illinois’ and the Chicago region’s share of formula-driven funds;
• preserve the basic structure of SAFETEA-LU in the reauthorization legislation;
• ensure adequate CMAQ funding for northeastern Illinois;
• maintain the firewalls and guaranteed funding levels for transit, highway and safety programs;
• increase the cooperative sub-allocation of funds to municipalities, counties and transportation agencies through metropolitan planning organizations (MPOs); and
• maintain SAFETEA-LU’s innovative programs, such as flexible funding provisions.

 B. CREATE Freight Rail Project Funding

The Chicago region is the nation’s rail hub. Goods traveling from coast-to-coast do not reach their final destination without coming to the region and being transferred to a west- or east-bound train. Unfortunately, given the antiquated equipment and technology currently in use, it takes just as long for train cars to get through the Chicago region as it does for them to arrive here from one of the coasts. Besides the obvious delays that occur in getting goods and product to their final destinations, the other negative effects of this situation include:

• ground traffic delays in the Chicago area caused by trains blocking the great number of grade level crossings in the region;
• added traffic congestion caused by the trucks needed to haul goods locally between train yards that support west- and east-bound trains;
• unwarranted delays in the movement of commuter rail traffic; and
• the loss of jobs and economic opportunity when distribution and warehousing businesses leave the region due to their frustrations with its existing freight-handling network.

This situation is only expected to get worse as freight train traffic is expected to increase by 80 percent over the next decade.

To address the region’s aging rail infrastructure and its negative effects, the Illinois Department of Transportation, the City of Chicago and the railroads proposed a funding plan called the Chicago Region

Environmental and Transportation Efficiency Project or CREATE. The Project includes many grade crossing improvements, technology upgrades and flyovers that will bring the region’s rail network into the 21 st Century.

Caucus Position: The Mayors Caucus thanks Congress for allocating $100 million in the last transportation reauthorization bill for the CREATE Freight Rail Project. These funds, along with $100 million that has been committed by the State of Illinois, another $100 million from the railroads and $20

million from the City of Chicago, are an excellent down payment on the $2.56 billion needed to fully fund all of the projects in the CREATE plan.

The Mayors Caucus intends to work with IDOT and the railroads to urge the members of the Illinois Congressional Delegation to:

• pursue funding opportunities for CREATE through the proposed economic recovery and reinvestment legislation;
• develop a coalition to lobby on the federal level to create a national rail policy as part of a new transportation bill; and
• lobby for full funding for CREATE in the next reauthorization bill.

C. Asian Carp

Recent lawsuits and legislation filed by Michigan officials and supported by other states call for the closing the navigational locks in the Chicago Sanitary and Ship Canal to stop the incursion of Asian carp into the Great Lakes. Closing this waterway would be devastating to the economy of the Chicago region and would potentially increase the risk of flooding in the area in the event of significant storm events.

Caucus Position: The Mayors Caucus agrees that more needs to be done to stop the migration of Asian carp into the Great Lakes. We are optimistic that a comprehensive plan for dealing with this invasive species will emerge from discussions currently taking place between federal officials and representatives of various state, regional and local agencies in the Great Lakes region. The Caucus is hopeful that the notion of closing the locks in the Sanitary and Ship Canal will be removed from consideration once the parties to these discussions learn of the effects such a decision will have on the Chicago region’s shipping and boating industry, its overall economy, and its ability to manage stormwater. To ensure they understand, the Mayors Caucus recommends that the United States Army Corps of Engineers do a study of the impact a decision to close the locks will have on the Chicago region’s economy.

III. Other State Priorities  

A. Prevent Foreclosures and Protect Neighborhoods

The Mayors Caucus and the Illinois Municipal League came together with housing advocates last year to support a legislative package to address the abandoned property component of the foreclosure crisis. That legislation, signed into law in December 2009, provided that municipalities receive notice when a foreclosure action is initiated and again when it is completed as well as established a priority lien position for municipalities if they tried, but failed to contact the owner of a vacant building and then did work necessary to maintain or secure the property. While the legislative package adopted in 2009 provides substantive tools for municipalities to address abandoned properties, additional legislation is necessary to further stem the foreclosure crisis.

Caucus Position: The Caucus supports legislation which authorizes municipalities to create vacant property ordinances and hold financial institutions responsible for maintaining any vacant or abandoned properties on which they have a mortgage. It will also work with housing advocates on legislation which gets to the root of the foreclosure crisis and provides tools which allow homeowners to stay in their homes. Such tools include foreclosure mediation, stand-alone counseling and legal aid programs.

B. Pension Tax Cap Exemption for Non-Home Rule Municipalities

While the Mayors Caucus strongly believes that comprehensive reform is the long-term solution to the problems which exist with Illinois’ pension systems, a short-term issue that needs to be addressed now is the inability of non-home rule municipalities to fully fund current pension obligations as a result of property tax caps.

Simply put, the Property Tax Extension Limitation Law (PTELL) states that annual property tax increases are capped at five percent or the annual increase in the consumer price index rate (CPI), whichever is less. In the past five years, the CPI has only grown at an average rate of 2.2 percent. However, the average annual growth rate for local government pensions has increased by nearly 25 percent over that period. This has been exacerbated recently by the poor performance of pension fund investments due to the economic downturn.

Unlike home rule municipalities which are not subject to the tax cap and can levy property taxes at rates that exceed the statutory cap in order to fund their pension obligations, the current economic downturn with reduced or no growth in the CPI and poor returns on investments have forced non-home rule governments to underfund their pensions.

Caucus Position: The Metropolitan Mayors Caucus supports a short-term fix to this underfunded pension situation which would exempt existing non-home rule pension obligations from the property tax cap. Continuing to underfund them is a recipe for financial failure.

C. Tax Increment Financing

Tax Increment Financing (TIF) is one of the last effective economic development tools available to local governments. Legislation has already been introduced to attempt to further reduce or even eliminate the use of TIFs by municipalities.

Caucus Position: The current statutory limitations on the implementation of TIFs are extremely rigorous and serve to ensure that they are only created where appropriate. The Mayors Caucus will oppose any legislation that imposes a moratorium or greater restrictions upon the use and creation of TIF districts.

D. Commercial FOIA Requests

Under the changes made to the Freedom of Information Act (FOIA) last year, local governments are require to respond to requests for information even if they are submitted by commercial entities which intend to use that information for business or for-profit purposes.

Caucus Position: Municipal officials believe that FOIA requests made by commercial entities to solicit customers, gather data needed to advance its business or seek information which support profit-making motives are intrusive and can jeopardize the privacy and rights of private citizens. The Mayors Caucus supports an amendment to the new FOIA law which authorizes municipalities to deny commercial FOIA requests or, alternatively, to charge for the full costs of the records sought.

E. Catastrophic Injury

The definition of “catastrophic injury” under Section 10(a) of the Illinois Public Safety Employee Benefits Act has been interpreted in different ways by the courts. As a result, confusion exists as to

whether municipal employers should be awarding or denying the extra health insurance benefits and disability claims of those employees awarded line-of-duty disabilities.

Caucus Position: The Mayors Caucus will work with the Illinois Risk Management Association, the City of Chicago, its participating suburban COGs and the Illinois Municipal League on legislation to clarify the term “catastrophic injury” and eliminate the abuses of the system that occur under its current interpretation.

F. Water Supply Planning

As the primary suppliers of water in the Chicago region, municipalities recognize that water supply planning is a priority. Recent research conducted in conjunction with the Northeastern Illinois Regional Water Supply Planning Group staffed by the Chicago Metropolitan Agency for Planning has highlighted areas of concern and projected potential water shortfalls in some parts of the region before 2050.

Caucus Position: The Metropolitan Mayors Caucus supports the following principles adopted by the Joint COG Water Supply Planning Group to address the water supply challenges of the future:

• Planning areas should be thoughtfully determined based on similarity of available resources and sensible geographic boundaries;
• Any water supply planning group created by the State should be advisory in nature and have a majority of its members be representatives of public water supply agencies. If a water supply governing body is contemplated, a majority of its membership should be public water supply agency representatives as well;
• Any future water supply planning efforts must have a strong educational component; and
• Recent regional and local water planning initiatives should continue and be taken into account by new water supply planning efforts.

G. Streamlined Sales Tax

In December 2007, the Governing Board of the Streamlined Sales Tax Project (SSTP) amended its enabling agreement to allow participating states to maintain origin or “point of sale” sourcing for intrastate purchases. It has been presumed that this amendment clears a significant hurdle in getting larger states like Illinois to join. However, there are still significant definitional issues with the context of the SSTP’s point of sale rules which, if not addressed, could have a substantial negative impact on Illinois municipalities.

Caucus Position: The Mayors Caucus will work with the General Assembly, the COGs and the City of Chicago to pursue implementation of the Streamlined Sales Tax Project Agreement as amended provided the above-mentioned definitional issues are resolved. It also believes that any legislation authorizing the State’s participation in the Agreement must:

• authorize all municipalities to have access to sales tax collection records from the Illinois Department of Revenue;
• address the definitional issues which could negatively impact several municipalities;
• call for a detailed study by the Department of the impact on each municipality of both the SSTP’s sourcing rules and the potential increased revenues from an expanded tax base due to the collection of taxes on Internet, catalogue and other remote sales; and
• include a guaranteed mitigation plan (i.e. not subject to the annual appropriation process) which will hold-harmless any municipality which may possibly lose revenues from the effects of the sales tax changes.

H. E-Waste Recycling

When the Electronic Products Recycling & Reuse Act was signed into law in 2008, Illinois was considered a leader in providing electronic recycling options for its citizens. The law sought to increase residential e-waste collection and gave most of the responsibility for e-waste collection to electronic manufacturers, thus relieving local government of the costs of such programs.

Unfortunately, several flaws were identified with the new law in the last year. This slowed the implementation of manufacturer-sponsored recycling efforts as well as either permanently or partially shutting the existing e-waste collection network in the Chicago region.

Caucus Position: Mayors Caucus staff has been meeting with the electronic manufacturing industry, environment organizations and State agencies to develop solutions to the flaws in the 2008 Act. To get the State’s e-waste program back on track, the Mayors Caucus supports the following amendments:

• Manufacturers must select recyclers in anticipation of the recycling year and be required to certify that the recyclers will comply with the environmental, health and safety standards set forth in the Act;
• The recycling goal should be increased from 2.5 pounds to 6 pounds per capita to reflect national average; and
• Restrictions requiring collectors to register before the recycling year should be lifted because collectors cannot be required to collect before they receive a guarantee from a recycler that a manufacturer can sponsor the collection.

I. Streamlining MFT Approval Process

Motor Fuel Tax (MFT) funds are utilized by local governments to support the upkeep of local roads.  However, in order to utilize these funds, road repair projects must be fully reviewed and approved in advance by IDOT, even if they are routine in nature.  In light of the staffing situation at IDOT, this layer of approval needlessly adds delays to projects and forces both IDOT and local governments to incur the additional cost of navigating this process.

Caucus Position: The Mayors Caucus supports streamlining the MFT approval process.  Local governments that utilize engineering professionals for MFT funded routine maintenance projects should be allowed to do so without the required pre-approval.  This would lead to faster and more efficient means to put these dollars to work repairing roads.  As a condition of implementing this streamlined process, IDOT would require any local governments participating in this streamlined process to be subject to audits to demonstrate that the funding was utilized according to all existing requirements.

This particular change could be implemented by IDOT through amendment to their rules.  Barring an internal change by IDOT, state legislation could require this streamlining.

J. Red Light Cameras

A 2008 report from the National Highway Traffic Safety Administration showed that 762 people were killed and approximately 137,000 were injured that year in crashes that involved red light running nationwide. About half of the deaths were pedestrians and occupants in other vehicles who were hit by red light runners. In order to reduce accidents and improve traffic safety, several municipalities in the Chicago region have installed enforcement cameras at intersections where red light running has been a problem. This traffic enforcement tool, has come under criticism in media reports in which towns have been accused of installing the cameras solely to generate revenues.

Caucus Position: The Mayors Caucus opposes any efforts to prohibit municipalities from using photo cameras for red light violations. Contrary to what critics say, they have proven to be an effective method for reducing accidents at dangerous intersections. Local law enforcement agencies and municipal boards or councils are better equipped to make the decisions as to where cameras should be sited. These are decisions that should be made on a case-by-case basis at the local level, not through a “one size fits all” rule made by a state legislative body.

K. Disability Pension Awards

Injuries which result in disability pension awards to municipal public safety personnel are often caused by third parties. Unfortunately, under current State law, municipalities are precluded from recovering either the full amount or a portion of the disability award from these parties. In other words, they are on the hook financially for a situation beyond their control or doing.

Caucus Position: The Mayors Caucus supports amending State law to allow municipal pension boards to sue third parties who cause injuries to police and fire personnel in order to recover the full amount or a portion of the disability pension awarded to the injured employees. In addition, the Caucus is in favor of legislation which would reduce a disability pension award by any amount awarded a recipient from a third party civil settlement or a worker’s compensation settlement.

  IV. Other Federal Priorities

  A. Electronic Commerce

The Streamlined Sales Tax Project (“SSTP”) has been working for the last several years to simplify state and local sales tax systems and removes the burdens to interstate commerce that were of concern to the U.S. Supreme Court in the Bellas Hess and Quill cases. The decisions in these two suits prohibited state and local governments from collecting sales taxes on catalogue and remote sales.

The SSTP adopted an amendment to the sourcing rules in its enabling agreement a year ago which will allow local governments to continue to collect taxes at the point of sale for all intrastate purchases. Taxes on interstate purchases (i.e. those made over the Internet, via remote catalogue, etc.) will be based on the levies in effect at the location to which they are shipped. This is also called destination sourcing.

This amendment will likely clear the way for the State of Illinois and other states to adopt the agreement and become a participant in the SSTP. While states and local governments have been doing there parts to work together to eliminate the hurdles to taxing electronic commerce and create the justification for Congress to overturn the Bellas Hess and Quill decisions, Congress has yet to act.

Caucus Position: The Metropolitan Mayors Caucus calls upon Congress to grant to those states that comply with the Streamlined Sales Tax Project Agreement as recently amended to allow point of sale

sourcing the authority to require all sellers, regardless of location, to collect the relevant state and local sales and use taxes. By granting this authority, Congress will ensure the viability of the sales tax as a state and local revenue source. It will also level the playing field between Internet, catalogue and “brick and mortar” retailers.