Pekin eyes slate of new taxes to pay for pensions, infrastructure needs

PEKIN, Ill. (WEEK) — UPDATE: Pekin Mayor-elect Mark Luft said the tax votes will be tabled tonight so the council can have more time to “mull it over.”


ORIGINAL: The Pekin City Council will consider a slate of new taxes on Monday in an effort to pay down the city’s pension liability and maintain infrastructure.

The Pekin City Council will look to double the city’s current 4 cents per gallon local motor fuel tax, and implement new taxes on electric utilities, gas utilities, and gas usage.

City engineers said they need $4 million annually to maintain the roads in Pekin, with those costs increasing every year. The current 4-cent gas tax generates about $530,000 a year for the city, with every additional cent projected to make another $130,000.

The city also faces an outstanding $21 million police pension liability and $41 million fire pension liability. The state is mandating a 90 percent funding level for all police and fire pensions by 2040. Rothert wrote the city would need to hike its pension costs by seven percent each year to meet the 2040 deadline, a pace he calls “unsustainable over the next 20 years.”

“The city must act, while there is still time on its side, to address these issues through existing
and new revenue streams,” said Pekin City Manager Mark Rothert in a memo to the City Council.

An average resident would pay about $4.20 a month more with the new utility taxes and increased gas tax, or $50.39 a year, the city projects.

The new electric utility tax would charge customers based on their usage of electricty per kilowatt hour. The gas utility tax would be applied to businesses distributing, providing or selling gas for consumption within the city limits, with a maximum rate of 5 percent of the businesses’ gross revenues. The gas utility tax would apply to customers’ usage of gas, measured in therms, with a maximum rate of 5 cents per therm.

Rothert noted many area communities, such as Peoria, Morton, Galesburg and Canton, already impose similar utility taxes.

The new revenues raised would be reserved for capital expenses and pension obligations, Rothert wrote. The three new utility taxes are projected to raise about $2.09 million a year, with $1.1 million going to capital expenses and $900,000 paying down pension costs.

The Pekin City Council meets at 5:30 p.m. at Pekin City Hall.

Tim Shelley

Tim Shelley

Social Media & Digital Content Manager
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