Illinois town pension problems lead to massive layoffs

By , RetirementFOXBusiness

Harvey, Ill. lays off police, firefighters over pension crisis

Harvey, Illinois Alderman Christopher Clark on the town's pension crisis.

A court-enforced decision by Illinois state officials to seize a small town’s tax revenue, to meet local pension fund obligations, has led the town to lay off 18 firefighters and half its police department employees.

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The layoffs are the latest development in a long-running dispute between Harvey, Illinois, a Chicago suburb of some 25,000, and unions representing its retired firefighters and police employees.

Harvey officials said Tuesday they will lay off more than three dozen employees.

“We are in a situation where basically monies were taxed, they were collected and the police pension and the fire pension weren’t paid,” Alderman Christopher Clark said Thursday to FOX Business’ Jeff Flock. “As a result now the [state] comptrollers held that money … from the city of Harvey, Illinois, and we don’t know how we are going to make payroll and other city services.”

Under Illinois law, the state can withhold tax money from a town to pay for pensions, which led to the shortfall in Harvey’s revenue.

An attorney for the police and firefighters union called the loss “pathetic” and “laughable” and criticized state management for underfunding the retirement plans.

“It’s not a pension crisis — it is a management crisis,” Clark added.  “We called. They came. They served. We owe that to them and the pension fund should always be paid, in my opinion.”

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Comptroller Susana Mendoza's office says it acted in response to state law that lets pension funds certify to the office that municipalities haven't made required payments.

Former alderman Fioretti says the town will appeal the judge's ruling, which would redirect tax revenue until the city pays down between $5 million to $7 million in pension debt.

The latest census calculations estimate Harvey’s population is 24,947 with 37.9% suffering from poverty, but a city check obtained by FOX Business showed a $12,000 payment made for hair and makeup.

“How was it signed off on?” Clark asked. “We don’t know how it happened but we know it’s signed off by the mayor and the city clerk.”

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