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Could Oak Lawn become the next Detroit?

  • Written by Tim Hadac

Village’s financial health nearly on life-support; officials have recovery plans 

  Like bone-weary contestants at the end of a Depression-era dance marathon, Oak Lawn officials and several stalwart citizens staggered out of Village Hall and into the midnight air Wednesday.

  Well over four hours after the Village Board meeting was gaveled open at 7:30 p.m. Tuesday, elected officials were admittedly exhausted. “We’re getting a little punchy here,” chuckled Mayor Sandra Bury as she explained a couple of minor procedural lapses on her part while trustees rushed towards the finish line by voting to postpone consideration of several matters.
  There was nothing humorous, however, in the main focus of the meeting: a stark assessment of Oak Lawn’s financial health, delivered by new Village Treasurer Pat O’Donnell in the wake of last week’s downgrading of the village’s general obligation bonds by Moody’s Investors Service.
  Figures provided by O’Donnell in his “Preliminary 5-Year Budget and Pension Impact’’ document show that while the current village budget of $49.6 million appears balanced on paper, the village is in fact running nearly $4.8 million in the red, thanks to underfunding of pensions and retiree medical plans.
  That annual shortfall, he stated, will balloon in the years to come, to as much as a projected $9.5 million in 2018.
  O’Donnell criticized past fiscal analyses conducted by the village, saying officials offered unfounded hope based on “rosy” revenue predictions and severely outdated actuarial tables that failed to take into account that as people continue to live longer, pension obligations increase.
  He said that Oak Lawn is in better fiscal shape than most other Illinois municipalities, yet he strongly cautioned trustees against “kicking the can down the road.” Inaction on funding pensions, he warned, will have a negative snowball effect and could result in financial catastrophe for the village.
  As a chilling example, he briefly discussed the fiscal crisis in Detroit and implied the same thing could definitely occur in municipalities across the nation—Oak Lawn included—if nothing is done.
  As a first step towards a remedy, O’Donnell proposed five steps for village government:
  • Obtain Village Board approval for the 2014 budget to include 90 percent of the actuarial-recommended pension payment, “which means we’re going to have to find an additional $5 million from somewhere,” he said.
  • Implement an immediate hiring freeze.
  • Freeze spending for 90 days on all new projects.
  • Put a freeze on any new loans for 90 days.
  • Declare a 90-day pay freeze for all non-union employees.
  He added that his analysis will be available online soon.
  Grim as it was, the analysis was praised by Village Manager Larry Deetjen, who called it “…adult talk, tough talk. It’s real.”
  Bury agreed, thanking O’Donnell and his team
  “I want to tell the residents of Oak Lawn…that I and several trustees on this board are committed to finding a way through this without raising property taxes,” Bury said, adding that pension underfunding “is the big gorilla in the room. We just can’t ignore it.”
  She said she plans to arrange a special meeting with local state legislators to enlist their aid.
  While there appeared to be consensus about the reality of the threat to the village budget, trustees battled their way though consideration of several cost-cutting ideas, including:
  • Outsourcing 911 services.
  • Switching from Blue Cross/Blue Shield to United Health Care Insurance.
  • Outsourcing senior citizen services to the Park District .
  • Eliminating specified vacancies in the current budget.
  • Abolishing the village’s Department of Business Operations, a move strongly objected to by Trustees Carol Quinlan and Bob Streit, who decried it as political payback against an employee who supported for Mayor Dave Heilmann is his losing re-election bid last spring.

In other board news:
  Bury announced that a new agreement with Advocate Christ Hospital and Medical Center—so new there was still no press release ready—will add $3.2 million to village coffers over the next several years.
  Developers Todd Berlingoff and Paul Sheridan of Hamilton Partners announced that plans for a new Mariano’s grocery store at 111th and Cicero are on track, with the store set to be constructed next spring. Other retailers and restaurants are expected to be a part of the landscaped development.
  Eagle Scouts J.P. Murphy and Jim Spoto were honored by the board for their service projects and earning the prestigious rank.
  Spoto collected over 700 pairs of used eyeglasses for the Evergreen Park Lions Club—a group that normally collects about a thousand in an entire year. The glasses are refurbished by the Lions’ Recycle for Sight Program and typically distributed to men, women and children in developing nations.
  Murphy’s project raised public awareness of the emerald ash borer, its devastating effect on ash trees, and practical steps people can take to eliminate the invasive insect and protect their trees.