Skokie’s village staff has presented a $175 million budget to the Village Board, which will vote on it June 3, but the village manager has warned that the state may take action that could cut the village’s revenue and/or force it to pay more for employee pensions.
Village Manager John Lockerby warned the Village Board of this possibility, and told Pioneer Press the village is working with the Northwest Municipal Conference to lobby against state mandates that could harm the village’s finances, including eliminating the grocery tax and requiring increased contributions for pensions.
Illinois’ 1% tax on groceries is collected by the state and reimbursed to municipalities. A proposed grocery tax cut, supported by Governor J.B. Pritzker, would eliminate a $1.2 million revenue stream to the village, according to Lockerby. The village would need to find another revenue stream comparable to raising property taxes by 10% or cutting costs equivalent to 11 firefighters or police officers, per Lockerby’s memo to the Board.
“(The grocery tax) has financing ramifications for every municipality in the state. I’ve talked to my peers and we’re all concerned,” Lockerby said.
Another potential threat to Skokie’s finances could arise from funds that municipalities must raise to be able to pay the pensions of their employees, such as police and firefighters.
As background, Illinois lawmakers in 2010 were trying to control mounting pension costs and passed a law creating a Tier 2, which reduced pension benefits for state employees hired after Jan. 1, 2011. A two-tier system remains in place in Illinois, but the level of pension benefits for Tier 2 employees eventually will fail to meet federal standards, so Gov. Pritzker has proposed a fix that will increase those benefits.
Currently, the village of Skokie contributes $16.5 million to its fire and police pensions. Still, if the state decided that the village needed to revert from a Tier 2 level to a Tier 1 pension system, it would be “devastating to (the) village(‘s) finances and pension funding levels,” Lockerby said.
Per the Northwestern Municipal Conference, a Tier 1 pension would give fire and police employees the option to get a full pension when they turn 50 years old and have 20 years of service. Under Tier 2, those employees would have to be 55 years old and have 10 years of service. Tier 1 benefits also include a higher cost of living adjustment. Lockerby said labor groups are pushing for the state to move municipalities from Tier 2 to Tier 1 pension benefits.
If approved by the state, another expense that the village could be looking at would be to fully fund health insurance plans for retired fire and public safety employees, which the village currently does not cover.
“It’s uncommon for municipalities to pay for retiree health insurance,” Lockerby said.
As for the budget the Village Board will consider June 3, it consists of a $68 million general fund, an increase of 2.4% from last year, and a $107 million other funds section, making for a total budget of $175 million.
According to Lockerby, 72% of the village’s revenue is closely tied to the village’s gas tax, food and beverage tax and sales tax, which can fluctuate due to the economy and consumer behavior. Lockerby said the village relies on those sources of revenue because of its voluntary freeze on property taxes going back to 1990, and hasn’t had the need to raise its tax levy since then.
Additional expenses in the 2025 fiscal year include $275,000 for rat abatement, $407,000 in health insurance costs for current village employees, and $203,000 in raises. The village was also hit with inflation, which necessitated spending an additional $203,000 on automotive parts and services, $80,000 on tree planting and pruning services, $76,000 on refuse disposal fees, and nearly $24,000 on higher animal boarding and relocation fees.
The 2025 fiscal year also budgeted for the unfreezing of two police officer positions, which had to be frozen because of financial hardships brought up by the COVID-19 pandemic. The village also budgeted spending $11,000 to implement the to-be-designed village seal.
The village also budgeted the following projects as a part of its capital improvement program:
- Repairing and resurfacing 4.85 miles of residential streets.
- Reconstructing and adding a multi-use path for Old Orchard Road between Woods Drive and Skokie Boulevard. The bridge over I-94 will also be replaced.
- Upgrades to the intersection of Main Street and Niles Center Road.
- Repaving the North Shore Sculpture path.
- Public Electric Vehicle charging stations.
- Replacing two miles of water mains.
The budget also approves spending to keep up with the village’s Environmental Sustainability Plan. The budget includes $2.45 million in funds directly tied to the plan and include the purchase of 15 electric vehicles, six hybrid vehicles, composting, green alleys and energy efficient upgrades, among other expenses.
