The Southtown Star

Towns struggle to pay employees

Blue Island included in 'widespread' problem

Monday, September 13, 2010

Officials from several Southland towns are seeking some creative means of financing to get them through some unusually tough times.

The situation is dire enough that towns including Blue Island, Sauk Village and Dixmoor may not be able to fully meet some upcoming payrolls.

With no reserves to fall back on and no cash flowing in for Blue Island, city employees may get only half their paychecks at the end of October, Mayor Don Peloquin said. Sauk Village Mayor Lewis Towers told the SouthtownStar last month that his town might not make payroll after August.

The problem is "very widespread," said Ed Paesel, executive director of the South Suburban Mayors and Managers Association. "Many, many communities are having severe cash flow problems."

Revenues are down to begin with because of the recession, but the problem has been compounded by delayed payments from the state and Cook County being late getting its property tax bills out.

"It's very severe," Paesel said.

Desperate times call for desperate measures. In order to meet its payroll, Country Club Hills last week approved a $4 million tax anticipation warrant - a short-term loan to tide it over until state payments arrive from the money the state collects in income and sales tax revenue, city spokeswoman Marge Seltzner said.

"It may be January before the state starts paying its bills," she said.

Paesel's group is working collectively with the Metropolitan Mayors Caucus to set up a meeting with Gov. Pat Quinn and pressure the state to speed up its payments. Typically, the state lags two or three months behind in its payments; it's now five or six months, Paesel said.

Influencing Cook County to make more timely payments wouldn't figure to be any easier. Paesel said that according to county officials, property tax bills are going out later than usual this year because so many property owners are appealing their assessments.

Paesel is trying to find a couple of banks to issue a tax anticipation warrant for a group of municipalities that have been unable to get one on their own, including Blue Island. Once the state releases its income tax revenue, it would go directly to the bank, Paesel said.

Blue Island is owed about $900,000 from the state and awaits $2 million in property tax revenue, but Peloquin said he may not see any of that until December.

"If we can just get one of those, we'll be OK," he said. But he doesn't expect the state to pony up, and he fears tax bills won't go out for months.

Property tax bills should go out Sept. 1, he said, but last year's bills were mailed out Nov. 1. Property owners are given one month to pay, and it's another month before municipalities see any of the revenue.

To meet his biweekly payroll of $400,000, Peloquin tried unsuccessfully to get a tax anticipation warrant on his own. After last year's delayed tax bills, banks are leery about loaning, he said.

The mayor met with city employees to let them know their third paycheck in October and the second one in November could be cut in half. Once the cash comes in, they would be paid back, he said.

The city has 126 full-time and 40 to 50 part-time workers.

Aside from the payroll issue, the city has a bond payment due in December, too. If that payment isn't made, "it will be the first time in my 25 years that we ever defaulted on a bond," Peloquin said. "As soon as we get tax money, we'll be fine. If we don't get any money in December, we're screwed. And we have no say in this."