What’s Next for Local Governments in 2013?

December 26, 2012

A look back at the Civic Federation’s blog this year provides a preview of upcoming fiscal challenges for local governments in 2013.

Pension Funding
The most urgent fiscal challenge for Illinois governments continues to be the pension funding crisis. The combined funded ratio for the four City of Chicago pension funds fell to 43.3% in FY2011. The funded status of the Cook County Pension Fund also fell in FY2011 to 57.5%. The County’s fund was over 90% funded as recently as FY2000. The following posts provide more detail on the declining funding levels:

The City, County and other local governments face difficult choices to stabilize these funds. The Civic Federation continues to urge local governments to work with relevant unions and to engage members of the Illinois General Assembly in moving forward with pension reform. In May 2012 Mayor Rahm Emanuel presented a reform framework to the Illinois General Assembly. The following posts discuss this proposal and a development closely linked to the City’s pension debate – the pending expiration of a ten-year settlement requiring the City of Chicago to share healthcare costs with retirees:

Infrastructure Funding
A recent report by the Civic Federation found that State and local governments could need to invest more than $300 billion over the next 30 years to maintain public infrastructure throughout the State. As detailed in the post below, the Chicago City Council established a Chicago Infrastructure Trust in April. Introduced by Mayor Emanuel, the Trust is an alternative source of funding that will be used to attract private sector funds to rebuild the City’s aging infrastructure.

The Civic Federation will continue to monitor developments related to the Chicago Infrastructure Trust. The Federation urges local governments to provide full disclosure about investors and contracts when engaging in projects related to the Trust.

Inadequate Level of Budgetary Reserves
A common concern in many of the Federation’s local government budget analyses this season was an inadequate level of budgetary reserves. Maintaining a healthy level of budgetary reserves is imperative to managing risk effectively. The Civic Federation encourages local governments to establish a target percentage of operating expenditures or revenues for its fund balance. The Governmental Accounting Standards Board (GASB) reporting standards for fund balance changed for local governments’ most recent financial statements. The following posts detail these new standards:

Fewer Illinois Governments?
According to the U.S. Census Bureau, Illinois had nearly 7,000 units of local government in 2007 – far more than any other state. The post below discusses a vote this year in Evanston to begin the process of dissolving its township. This vote is likely to renew debate about Illinois’ extraordinary number of local governments and whether they are an efficient mode of service delivery in the 21st century.

Continued Modernization Efforts
In its FY2013 budget analyses for the City of Chicago and Cook County, the Civic Federation praised both governments for continuing much needed restructuring efforts. The following blog posts discuss several of these efforts:

The Federation urges local governments to continue critical modernization reforms in 2013. The following posts are an update on progress by the City and the County on the Federation’s recommendations to improve long-term fiscal condition:

Continue to follow the Civic Federation and IIFS blogs in 2013 for ongoing analysis of fiscal developments across Illinois. You can subscribe to both blogs via RSS feeds compatible with Microsoft Outlook, Gmail and most web browsers.

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