Temporarily decreasing payments to fire and police pension funds to be discussed at next Decatur City Council meeting

The annual property tax levy and its connection to police and fire pension funds will be among the 6 topics to be discussed at the city council meeting on Monday, November 2 at 5:30 PM in the Decatur Civic Center Theater. 

As background, last year’s property tax levy of $14.2 million went to fund five entities: fire pension fund payments ($5.1 million, 36% of total levy), police pension fund payments ($4.0 million, 28%), Decatur Public Library ($2.9 million, 20%), debt payments ($2.1 million, 15%), and Decatur Municipal Band ($65,000, <1%).  In regards to firefighter and police pension fund payments, general fund revenues are also used to meet the city’s pension fund obligations.  Thus, if property taxes collected do not keep up with rising pension fund obligations, contributions to those funds from the general fund will increase (in recent years, 14-16% of the annual pension fund contributions have come from the general fund).  Based on the decisions that that city council makes about the property tax levy and general fund spending in 2021, this could mean decreasing pension fund payments.  I am concerned about decreasing pension fund contributions below the 100% level consistently contributed to in the past, particularly given the city has slowed implementation of one strategy that may have allowed for continued funding at the 100% level. 

RELATIONSHIPS AMONG ANNEXATIONS, PROPERTY TAX LEVY, AND FIRST RESPONDER PENSION FUND PAYMENTS

In part to increase the city’s Equalized Assessed Value (EAV) and cumulative amount of property taxes collected from all properties combined, the Decatur City Council consented to annexing all properties that were contiguous to city boundaries that were connected to city water, as well as other properties <60 acres that were completely within the city boundary (there were over 500 such properties when annexations began last year). 

EAV and property taxes are related.  Over a ten-year period, the city’s EAV decreased over $100 million from $928.5 million in 2009 to $824.5 million in 2018 (11% decrease).  Simultaneously, property taxes collected increased 23% from $11.2 million in 2009 to $13.8 million in 2018. 

More recently, the Equalized Assessed Value (EAV) of all properties in Decatur in 2019 increased to $832,843,703 compared to $824,544,671 in 2018, an increase of $8,299,032 (1.0%).  Property tax rates for the city’s portion of overall property taxes also increased for multiple reasons.  For example, in its deliberations last year, the city council projected EAV to increase $13.3 million due to 500 property annexations.  Instead, the city annexed 216 properties for which the EAV increased ~$6 million. 

This year, city staff reduced the number of annexations and the EAV is expected to increase ~$2.7 million.  Meanwhile, the police and fire pension fund requirements are expected to increase from $4.7 to $5.6 million and $5.9 and $6.2 million, respectively.  Fewer annexations will decrease the amount of property tax collected and likely result in greater obligations to the general fund to fund police and fire pensions.  Thus, while police and fire pension costs are increasing $1.2 million combined between 2020 and 2021, by not continuing to implement city council policy and reduce the number of annexations, the city has unnecessarily strained the general fund in 2021 to pay for the increase. 

CITIZENS ARE ENCOURAGED TO PROVIDE FEEDBACK TO CITY COUNCIL MEMBERS

If you would like to discuss this or any other issue with a city council member, phone numbers and e-mail addresses for each council member can be found at the following link: https://www.decaturil.gov/mayor-and-council/council/. 

PLEASE EXPRESS YOUR VIEWS AT CITY COUNCIL MEETINGS

Meetings take place at the Theater located on the second floor of the Decatur Civic Center (1 Gary K. Anderson Place).  Free parking is available in the lot immediately south of the entrance.  Citizens are encouraged to attend meetings and express their views.  Citizens are allotted 3 minutes per person near the beginning of each city council meeting.  In addition, citizens can provide comments regarding one regular agenda item per meeting for up to three minutes provided they notify the city in advance (and prior to the start of the meeting).  You can request to speak on a particular agenda item at a council meeting by filling out an on-line form at: https://www.decaturil.gov/mayor-and-council/advance-request-to-speak-at-council-meeting/. 

AGENDAS FOR CITY COUNCIL MEETINGS ARE AVAILABLE ONLINE

An agenda and information about each agenda item for each city council meeting can be found at: https://www.decaturil.gov/mayor-and-council/council-meetings/.