Unfunded Mandates Are What Keeps Illinois Mayors Up At Night – WP Original
By: Nancy Mathieson*
When a group of local mayors met at Congressman Bob Dold’s (IL-10) recent roundtable discussion, it didn’t take long for them to realize they already had a consensus about their most worrisome issue. (Hint: it’s not rising property taxes.)
What keeps these mayors up at night is the proliferation of unfunded mandates: new regulations that require local governments to perform certain actions with no additional funding. According to the Illinois Municipal League, state lawmakers have introduced a total of 59 unfunded mandates during the 2015 legislative session (see study). The mandates fall into the categories of Notification Requirements, Health Insurance, Wages and Benefits and Property Taxes, and could have costly implications for local governments.
One contentious mandate passed in Springfield last November now requires local fire departments’ staffing levels be subject to bargaining (“minimum manning” bill.) Municipal leaders initially pushed back on this bill (HB5485), saying the change could take decisions about fire department staffing levels out of their hands. Mount Prospect Mayor Arlene Juracek estimates that union bargaining may eventually require one additional firefighter per shift or three additional each day in her village. In a larger city west of Chicago, Rockford Mayor Larry Morrissey says his town already has to pay more for firefighting than necessary because contract language requires it be negotiated. The resulting revenue squeeze had forced Rockford to cut its police force and other services.
Also related to firefighters, included in the list of 59 proposed mandates is SB817, an amendment to the Downstate Firefighters Article of the Ill. Pension Code. This amendment would potentially increase disability costs by expanding time “on duty” to any firefighter assignment approved by the fire chief, including training within or away from the municipality.
Concerning public safety, the current statewide push for the use of body cameras to record police actions would have an impact on municipal budgets. Smaller towns are even contemplating adding fees to each traffic ticket to cover the costs of any new mandate related to body cameras.
On the federal level, one worrisome mandate was passed years ago but hasn’t even gone into effect yet, the “Cadillac tax.” By 2018, the Affordable Care Act (“Obamacare”) will be imposing an annual 40% excise tax on employee healthcare plans with annual premiums exceeding $10,200 for individuals or $27,500 for families, to be paid by the insurers. These healthcare plans are known as the “Cadillac plans,” and the tax is imposed on their actual costs exceeding those values. Even though the enactment of this tax has been delayed several times, Liz Brandt, newly elected mayor of north-suburban Lincolnshire is already projecting the budget impact on her village’s 68 (full-time equivalent) employees. Mount Prospect Mayor Juracek estimates the future tax penalty on her village’s 294 full-time employee benefits plans is about $100,000.
In another issue related to municipal budgets, both Congressman Dold and Mayor Juracek are supporters of the Marketplace Fairness Act of 2013, a bill in Congress which would require all sellers of a certain size to collect taxes on remote sales, including internet sales. Mount Prospect is home to Randhurst Village, the first enclosed regional mall in the Chicago area, now an open-air shopping center. “Bricks and mortar” retailers generally support this Act.
*Nancy Mathieson has a 30-year career in business, securities regulation and public policy. She held positions at the Chicago Mercantile Exchange (CME) and the New York Stock Exchange (NYSE), where she was a Director of Market Surveillance and managed a professional staff in the investigation of securities trading violations.
She served as Operations Director at Truth in Accounting, a Chicago non-profit whose mission is to promote transparency in government financial reporting. In this role, she directed Accounting teams in grant-funded research studies on the financial condition of state and local municipalities.
Nancy was an officer of the National Investor Relations Institute (NIRI) in Stamford, CT and has lectured at the University of Connecticut. She received her B.S. in Economics from the University of Illinois at Chicago and her M.B.A. from New York University.