Harvey on the brink
Tuesday, Apr 10, 2018 - Posted by Rich Miller
* NBC 5…
After a judge ruled against the city of Harvey as it seeks money the Illinois Comptroller’s Office is holding, the city’s mayor warns that massive layoffs could be on the horizon.
Harvey Mayor Eric Kellogg convened an emergency meeting on Monday after a judge ruled that the state acted appropriately in withholding $1.4 million to cover shortfalls in the city’s pension plan.
“The city of Harvey has never undergone massive layoffs like the ones we’re expecting for our police and fire departments,” Kellogg said. […]
In a statement, Comptroller Susana Mendoza’s office said it acted appropriately.
“The legislature passed a law allowing pension funds to certify to our office that municipalities have failed to make required payments to pension funds,” the statement reads.
* ABC 7…
Employees are expected to receive their paychecks this Friday, but Harvey officials are not certain about the next payroll.
* Background from last month…
In 2015, a Cook County judge found that the city of Harvey, a south Chicago suburb, owes more than $7.3 million to its police pension fund after failing to make payments for nearly a decade.
To satisfy this judgment, Illinois Comptroller Susana Mendoza is currently withholding more than $1 million in revenues due to the city. […]
The city, represented by Ken Hurst with Roth Fioretti, owes payroll of $400,000 due on April 13 as well as an additional $300,000 for its employees’ health insurance, but currently holds less than $200,000 in its general fund, according to the suit. […]
Harvey is currently in serious debt, with a deficit of $5.9 million, and its collection rate on real estate taxes is just 58 percent. […]
In 2015, Harvey reached an $18.5 million settlement with Chicago to pay back the money it owes for water taken from the city without paying and resold to other suburbs.
The failed lawsuit is here.
* Related…
* Ex-Harvey official made secret recordings for prosecutors in bribery investigation, unsealed documents show
* Federal investigation continues in Markham after mayor’s guilty plea: At the center of the investigation is a series of secret recordings made by a now-deceased Harvey comptroller, Joseph Letke, whose firm was also paid by Markham. Letke recorded conversations with Harvey officials, including Donald Luster, a consultant to Harvey given influence over economic development by Mayor Eric Kellogg. Luster said he could fast-track projects if given bribes, according to the affidavit filed in court for a search warrant.
* At Harvey jail, escaped inmates fall through ceilings and gates do not lock, officers say
- Amalia - Tuesday, Apr 10, 18 @ 9:34 am:
hey Harvey, do you remember when you were holding water for Dixmoor hostage? get your own house in order.
- PJ - Tuesday, Apr 10, 18 @ 9:34 am:
They didn’t make a pension payment for *ten years* and still have only 200k in their general fund? What the holy hell is happening?
- Downstate - Tuesday, Apr 10, 18 @ 9:37 am:
And so it begins. This is the start. A community downstate just gave up their community owned ambulance service to be able to afford the growing pension pile.
- wordslinger - Tuesday, Apr 10, 18 @ 9:40 am:
Harvey’s been a prime candidate for a state takeover of finances for a long time. Lot of hinky stuff going on there, and not just in the strip clubs.
- A guy - Tuesday, Apr 10, 18 @ 9:41 am:
This is something to watch. Harvey may be beyond a solution, but there are plenty more munis on this slippery slope.
While there’s likely no other remedy, it’s amazing irony that the state is adjudicating this mess given their own situation.
- Perrid - Tuesday, Apr 10, 18 @ 9:41 am:
Downstate, no. This is on Harvey for their out right corruption and mismanagement, not because of the “onerous” pensions.
- UIC Guy - Tuesday, Apr 10, 18 @ 10:00 am:
Good that the state is riding herd on Harvey for neglecting pension payments. If only some higher authority had been doing the same with the state for the last hundred years or so….
- ImNotTaylorSwift - Tuesday, Apr 10, 18 @ 10:00 am:
About a year ago, the Tribune ran an op-ed about annexation. The City used it for a long time to fuel its own growth. If the City annexed some of the more hard-hit south suburbs, they could benefit from lower City property tax rates and possibly spur growth in those neighborhoods. They’d also presumably benefit from not being overwhelmed by problems like the one in the post. I’m not sure the City wants to take on south suburban problems, but it would be the neighborly thing to do. And if we’re going to restart annexation, we might as well go for Harwood Heights, Norridge, and Rosemont to balance out Harvey.
- wordslinger - Tuesday, Apr 10, 18 @ 10:06 am:
–About a year ago, the Tribune ran an op-ed about annexation.–
Yeah, well, I don’t anyone is looking to annex Harvey. South Holland is more likely to build a wall.
- TheFordLawyer - Tuesday, Apr 10, 18 @ 10:16 am:
To paraphrase the Beatles: “Chapter 9…Chapter 9… Chapter 9…”
- foster brooks - Tuesday, Apr 10, 18 @ 10:20 am:
is rita crundwell running the books there?
- ChrisB - Tuesday, Apr 10, 18 @ 10:41 am:
Harvey is simply baffling. Kellogg makes Blago look like Honest Abe Lincoln (the even more saintly caricature version), and yet he’s been in power for what, 20 years? JJJr. used to threaten bringing in the National Guard to straighten things out, countless Trib exposes, and yet, nothing ever changes.
When we used to play Thornton High School in sports, the poverty on display was incredible. I don’t understand how that guy keeps getting elected.
- Anyone Remember - Tuesday, Apr 10, 18 @ 10:45 am:
ImNotTaylorSwift -
In September 2017 the Manhattan Institute, a conservative think tank, mentioned something similar. Specifically, for Chicago, they suggested Calumet City and Dolton.
https://www.manhattan-institute.org/html/mergers-may-rescue-declining-suburbs-10611.html
- Chicago_Downstater - Tuesday, Apr 10, 18 @ 11:01 am:
@ImNotTaylorSwift
That’s an interesting idea, but I doubt it would ever happen. First, the richer suburbs prime for annexation would scream the idea down. Second, some of those annexation targets are much more politically conservative than Chicago proper and that could jeapordize Dem control of the city.
- Last Bull Moose - Tuesday, Apr 10, 18 @ 11:06 am:
Any politician who advocates annexing Harvey should be put on a psychiatric hold.
Could the State take over Harvey and put Dan Proft in as administrator? He could try for minimal government. And it might keep him busy, reducing damage to the rest of us.
- DuPage - Tuesday, Apr 10, 18 @ 11:20 am:
===Harvey is currently in serious debt, with a deficit of $5.9 million, and its collection rate on real estate taxes is just 58 percent.===
I think I see part of their problem.
- Smalls - Tuesday, Apr 10, 18 @ 11:27 am:
Believe it or not, they actually have audited financial statements on their website. That being said, all that audit is saying is that they are basically accurate. And that is not a pretty picture.
At the end of their FY2016 (4/30/16), they had a deficit fund balance in their General Fund of $51.6 million. Their total spending in their General Fund is $26.5 million. So the negative fund balance is twice what their annual spending is. They have been stealing money from every other possible source (water fund, TIF Funds, Motor Fuel Tax) to pay for operations. How have they not already been declared a distressed city by the state, and put under a Financial Advisory Authority? This has been exposed for years, lots of state elected officials asleep at the wheel on this one. Let alone all the criminal investigations that should follow.
- Six Degrees of Separation - Tuesday, Apr 10, 18 @ 11:30 am:
I thought the IMRF would not let contributions lapse this long…it’s supposed strength is that the employer payments are “always” made. Or were the municipal pensions not under their purview?
- BK Bro - Tuesday, Apr 10, 18 @ 11:54 am:
Ahhh the first defacto municipal BK to begin in Harvey. Harvey is going to be a messy legal dumpster fire thanks to the State not implementing an orderly BK process - despite the fact that several municipalities in the State are obviously heading towards default in some form.
- City Zen - Tuesday, Apr 10, 18 @ 11:55 am:
==I thought the IMRF would not let contributions lapse this long==
IMRF does not include police and fire.
- Ron - Tuesday, Apr 10, 18 @ 12:12 pm:
A lot more of this to come. Municipal bankruptcy is a must.
- striketoo - Tuesday, Apr 10, 18 @ 12:12 pm:
To quote Bruce Springsteen: “My Hometown”. Left 50 years ago.
- Demoralized - Tuesday, Apr 10, 18 @ 1:00 pm:
==Municipal bankruptcy is a must.==
You’re only in favor of that because you’re giddy about taking pensions away from people.
- wordslinger - Tuesday, Apr 10, 18 @ 1:06 pm:
–Ahhh the first defacto municipal BK to begin in Harvey.–
What’s a “defacto bankruptcy?” Does that go throug a “defacto court?”
Or were you talking about Burger King, something you might have a clue about?
- Honeybadger - Tuesday, Apr 10, 18 @ 1:17 pm:
Harvey has neglected to make the correct, if any pension payments for years. That is the problem.
- Maximus - Tuesday, Apr 10, 18 @ 1:35 pm:
Is this the township that makes it clear how pensions are not the way to go forward with funding employee retirements? If Harvey had been using a form of 401k for the fire and police retirement plans there would still be financial trouble but the retirees wouldnt have anything to worry about. They wouldnt even have a dog in this race, their money would be safe in some retirement account that keeps paying them.
- Perrid - Tuesday, Apr 10, 18 @ 1:42 pm:
@maximus, in the best case scenario, yes. In the worst case (see 2008 crash) they could get nothing, or virtually nothing. 401k’s take risk away from the employer and put it on the employee. There’s an argument made that that is where the risk should be, personal responsibility and all that, but please don’t try to sell 401k’s as better for the employee.
- Maximus - Tuesday, Apr 10, 18 @ 1:47 pm:
-Perrid,
Anything in finances has risk. Ideally if you are now drawing from your retirement plan it’s in some form of stable funds that arent going to be reacting to volatility in the market. Also, the majority of retirement plans in the country are IRA or 401k or something classified as a defined contribution fund which means the Harvey employees (and others) would have the same level of risk. If you asked a retired Harvey police office right now if they would like to keep their pension or convert it to an IRA I bet 9 out of 10 would take the IRA option. They are painfully aware the money is running out and nobody can tell them what happens when it runs out.
- Good Timing - Tuesday, Apr 10, 18 @ 2:11 pm:
This will be the perfect case study for the first class of the Joe Berrios Institute of Public Policy & Governance.
- Smitty Irving - Tuesday, Apr 10, 18 @ 3:08 pm:
Ron -
As Harvey’s civilian employees belong to IMRF, which is over 90% funded (the goal of the Edgar Ramp), beyond losing their jobs bankruptcy would save Harvey by stiffing current vendors and destroying police and fire pensions. Am I missing anything?
- Anonymous - Tuesday, Apr 10, 18 @ 3:35 pm:
Taxpayers should not be in the business of guaranteeing personal investment returns of public employees.
Move them to SSA and a non matched 401k. At least until public employee benefit protection is removed from the state Constitution
- BK Bro - Tuesday, Apr 10, 18 @ 3:35 pm:
@wordslinger
Defacto BK meaning that Harvey will inevitably be forced to negotiate with creditors - only without an orderly Chapter 9 BK. Creditors that are shorted will inevitably sue, thus landing Harvey in messy litigation.
Please enlighten us on what you think will happen to a municipality that might not even meet payroll the next time checks get cut.
- Oswego Willy - Tuesday, Apr 10, 18 @ 3:37 pm:
===Taxpayers===
We’re all taxpayers.
Constitutional guarantee.
If you want one, apply for a job that has a pension.
- Smitty Irving - Tuesday, Apr 10, 18 @ 3:58 pm:
Anonymous -
Firefighters and police officers were excluded from SSA as those jobs, generally, can’t be performed by 64 year olds. IMRF is 90% funded. Try again.
- City Zen - Tuesday, Apr 10, 18 @ 4:01 pm:
==Move them to SSA and a non matched 401k==
No match? Man, that’s just mean. That’s mean, man.
==We’re all taxpayers.==
But taxes are not the revenue source upon which income is derived for all.
You could say “Taxpayers should not be in the business of giving tax credits to local businesses.” But those businesses are taxpayers too. Should we just counter “We’re all taxpayers”? Probably not.
- Anonymous - Tuesday, Apr 10, 18 @ 4:03 pm:
Police and firefighters should not be excluded from SSA. Try again
- Smitty Irving - Tuesday, Apr 10, 18 @ 4:07 pm:
Anonymous -
So, 65 year old firefighters and cops?
- Demoralized - Tuesday, Apr 10, 18 @ 4:11 pm:
Anonymous (aka Ron)
If you don’t like your lot in life as far as pensions goes get another job instead of whining about what someone else gets. It’s just sad.
- Anonymous - Tuesday, Apr 10, 18 @ 4:14 pm:
CityZen, until public employee benefit protection is removed from the state Constitution, we can’t provide a match.
- City Zen - Tuesday, Apr 10, 18 @ 4:26 pm:
==So, 65 year old firefighters and cops?==
Better yet, what was the retirement age for firefighters and cops 65 years ago? Was it the same as today?
Seems odd that decades of huge advancements in healthcare, work safety, and technology has not translated into one extra day of service for public safety workers.
- Radio Flyer - Tuesday, Apr 10, 18 @ 6:41 pm:
“Seems odd that decades of huge advancements in healthcare, work safety, and technology has not translated into one extra day of service for public safety workers.”
If you’re a fireman you still have to be able to run into a burning building and carry an unconscious 200 lb man down a ladder.
- Bobio - Tuesday, Apr 10, 18 @ 6:57 pm:
Maybe Dreeson can do a benefit.
- Smitty Irving - Tuesday, Apr 10, 18 @ 7:12 pm:
City Zen -
Don’t you think such advances would first be seen in the military? They haven’t seen it, either.
- Old Time R - Tuesday, Apr 10, 18 @ 7:35 pm:
Update about Harvey FYI at 3pm police and fire layoffs announced to members of the union. Approximately 18 fireman and some policemen told they were being laid off.
- City Zen - Tuesday, Apr 10, 18 @ 8:12 pm:
==If you’re a fireman you still have to be able to run into a burning building and carry an unconscious 200 lb man down a ladder.==
So a 55 year-old fireman in 1953 could do it but a 56 year-old fireman today cannot? I know public safety worker benefits are the 3rd rail of politics, but at some point someone has to ask the question.
After many years of gym membership, the only guys I’ve ever seen use 100lb dumbbells were well over 50.
- Billy Dee - Wednesday, Apr 11, 18 @ 1:20 am:
Only one trying to help is Alderman Clark. But the administration keeps attacking him. The administration’s solution is to first layoff police and fire? No wonder the city is in trouble.
- Radio Flyer - Wednesday, Apr 11, 18 @ 6:31 am:
I’m in my 60s and, no, I don’t have the same body I had in my 50s. But tell me where I can buy some of that technology stuff so I can feel like I’m in my 50s again. Whoo Hoo.
- Smitty Irving - Wednesday, Apr 11, 18 @ 6:46 am:
City Zen -
IF what you say might be true, the first step is to do what the Feds do for police officers and active military - paid work hours to work out in an employee only gym. Don’t see the Harvey / Gulfport / Mounds City police departments doing either.
- Ron - Wednesday, Apr 11, 18 @ 6:49 am:
Harvey has been a disaster for decades. The feds need to take over.
- Ron - Wednesday, Apr 11, 18 @ 6:51 am:
If a firefighter or police officer is unable to do the job the should move and and rollover the 401k.
- Da Big Bad Wolf - Wednesday, Apr 11, 18 @ 7:01 am:
Maybe Winnetka should annex Harvey. And a high speed monorail to connect the two parts of the city. Yeah, that’s the ticket.