Rockford aldermen hear sobering budget report

Rockford, Illinois Isaac Guerrero Rockford Register Star October 9, 2018 Finance + Operation

The city should consider shrinking its police and fire departments, closing a fire station and selling its water system to avoid running out of money in five years. And that’s just part of the bitter pill that consultants are prescribing for Rockford, which is nearing the edge of a fiscal cliff as its employee salary and pension expenses are outpacing its revenue.

Aldermen heard how to overcome that challenge during a presentation on Tuesday from National Resource Network — a consortium of nonprofit and for-profit organizations that helps cities solve pressing economic problems.

Rockford was among five U.S. cities chosen to receive the consortium’s help due to the city’s population decline and its high levels of poverty, crime and unemployment. What National Resource Network delivered is a sobering blueprint showing how Rockford can achieve balanced budgets over the next seven years.

It’s not likely that aldermen will enact all of the budget suggestions, nor will all of the chosen measures be pursued at once. The National Resource Network’s report is something like a menu of city services, said Mayor Tom McNamara. Ultimately, he said the City Council, with help from city employees and residents, will decide what municipal services there is an appetite for and at what price.

Among the consultant’s suggestions:

  • Eliminate 40 sworn police officers through attrition over the next seven years to put Rockford in line with comparable cities.
  • Evaluate fire station locations and study the potential to close a station. Reduce minimum firefighter staffing requirements and bring staffing in line with the city’s population through a hiring freeze and attrition of 27 firefighters.
  • Freeze wages for all city employees at 2019 levels or cap wage growth at 1 percent for three years.
  • Increase city employee contributions toward health insurance expenses, and incentivize employees to obtain health insurance elsewhere.
  • Make a one-time pension payment between $25 million and $100 million to dramatically lower the city’s long-term pension obligations.
  • Consider selling the city’s water system to earn a one-time windfall that could allow it to pay down its pension obligations.

Rockford’s expenses are projected to grow three times as fast as its revenue over the next seven years. If that trend continues, the city would deplete its budget reserves in 2023 and wind up with a $46.9 million general fund deficit by the end of 2025. Seven years from now, the city’s cumulative deficit would swell to $81 million.

McNamara said his administration will work with aldermen to adopt a budget for 2019 before the end of this year. All of the National Resource Network’s budget suggestions are on the table, the mayor said. Engaging the city’s union employees in the task that lies ahead is sure to be contentious.

The 54-page summary of recommendations that National Resource Network gave to aldermen Tuesday ends with a blunt bit of advice:

“We understand that the city enjoys good relationships with its employee groups and the concerns that these relationships may suffer if the city takes tough bargaining positions. The reality is, given the city’s financial condition, the city may have no choice.”