Rockford Must Do Things Differently and Do Different Things
October 09, 2018
Since January, the National Resource Network – a group of national urban policy experts that support economically challenged cities – has been working with city leadership to develop a seven-year financial plan for Rockford. In the last five years, the Network has partnered with more than 50 cities nationwide on similar efforts to restore economic competitiveness and develop blueprints for fiscal sustainability.
The Rockford plan creates a path to fiscal sustainability and provides a way for the city to continue to invest in efforts to reduce crime and revitalize neighborhoods. But it will require city government to do things differently and to do different things.
The decline in property values — from $2.1 billion in 2008 to $1.4 billion in 2016 — is at the heart of the Rockford fiscal challenge. As property value has declined and the city has collected less in taxes, the city has had to meet state mandated increases in funding for employee pension systems that will grow through 2040. And state law prohibits Rockford from reducing costs by moving current or future employees out of a pension retirement plan and into a 401(k) plan. To top it off, Springfield has dealt with its own fiscal challenges by cutting aid to cities.
The bottom line is that if city leaders fail to act, Rockford would run a cumulative deficit of approximately $81 million in the next seven years. By the end of 2023, City Hall would run out of money.
There are no easy fixes for Rockford. The March vote against home rule status sharply curtailed the city’s options to generate revenue from non-residents rather than heavily relying on taxing its own citizens. The increased utility tax closed the current year budget gap, but not the full long-term structural deficit. And, as Mayor Tom McNamara has noted, tax burdens for city residents are already high.
In the short term, the city needs to identify ways to cut costs and increase revenue without harming services that are critical to quality of life and the ability to retain and attract residents and business. In the long term, even as the city seeks to limit spending, it has to make strategic investment to grow the tax base and economic opportunity for its residents.
Fundamentally, that means that city government needs to re-think equating more spending with better results.
Public safety may be the single most important function of any city government. And in Rockford, nearly 80 cents of every dollar spent by city government goes to police or fire services. On a per capita basis, Rockford has significantly larger police and fire departments than other Illinois cities. Public safety drives the budget gap: In fact, by 2025, the city’s projected fund balance deficit would actually be greater than total city spending on everything other than the police and fire departments.
No city seeking to grow and prosper can abandon its commitment to public safety. But Rockford may be able to reduce crime and improve health by continuing to focus more on lower cost, prevention-first initiatives. For example, the Rockford Fire Department is already a national leader on an effort to drive down EMS calls by identifying frequent users and offering alternative, less costly ways to address their health concerns. In the Police Department, it may be less costly and more effective to have civilians perform certain duties — reducing cost and freeing up police officers for patrol.
Throughout city government, the quality of service is driven by the ability to attract and retain a dedicated and qualified workforce. Like most local governments, Rockford is highly labor intensive with more than 70 percent of spending going to salaries and benefits. No city can balance its budget on the backs of its workers. But it will be impossible to close Rockford’s budget gap without the cooperation of municipal labor leaders.
As Rockford takes on these challenges, it can serve as a model for tackling these issues head-on with strong leadership, community involvement and a collaborative spirit. But make no mistake: Rockford’s future depends on taking action now.