Lake County Gazette

Lake County Gazette

Sunday, January 26, 2020

Local communities selling off sewer systems to help fund pension debt


By Glenn Minnis | Jan 9, 2020


Wirepoints President Ted Dabrowski says that states across the U.S. have crippled their cities by allowing runaway pension systems to grow even more out of control.

“A lot of cities know property taxes are going too high and they're trying to raise money to deal with the issue, even if it’s at the expense of the public,” Dabrowski told the Lake County Gazette. “Instead of states helping cities solve the problem by reforming pensions and changing laws, the federal government is doing nothing and forcing cities to do all kinds of things to create [solutions].”

According to Bloomberg News, that now includes offering public water and sewer systems for sale as a way of raising reserves. Estimates are that municipalities generated upward of half a billion dollars over the last five years by selling their water and waste utilities to private companies.

Wirepoints President Ted Dabrowski

Here in Illinois, where taxpayers are on the hook for at least $137 billion in unpaid pension liabilities, the trend is on the rise. In Granite City, where unfunded pension liabilities have skyrocketed past $130 million, authorities are now weighing an offer from Illinois American Water for the town’s sewer system. 

The move comes just two years after town leaders sold a $40 million pension obligation bond in order to be able to make a payment into a pension system that had less than half of what it needed to cover its obligations. Last year, the town of Alton sold its wastewater system to Illinois American for nearly $54 million, all of which went toward its $134 million in pension debt.

Dabrowski insists it speaks to the level of desperation that towns and cities across Illinois are feeling.

“What you’ve done is take public assets away from the public,” he said. “In the end, this is not good for taxpayers and just a short-term fix. Putting proceeds into police and fire pension funds will immediately improve funding for those funds, but if the city ever gets in trouble all the public assets are already gone.”

Dabrowski contends that enacting pension reform would be a much better way forward.

“The state needs to amend the pension clause in the Illinois constitution so we can make changes going forward to things like defined contribution plans and collective bargaining laws,” he said. “Basically, we need to rein in the policies that keep driving up the costs.”

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