Evanston’s Finance and Budget Committee agreed to advance a city staff recommendation Wednesday night that revises a previously agreed to pension policy to clarify how revenue from the Personal Property Replacement Tax should be allocated.
The suggestion, pushed for by Evanston Firefighters Pension Fund president Jack Mortell, revises language that Ald. Clare Kelly (1st) and Ald. Parielle Davis (7th) argued was ambiguous with how to allocate PPRT revenue.
Mortell has long argued that a 2023 resolution agreed to by the City Council requires the city to allocate the “maximum allowable [PPRT] revenues for the Police and Fire Pension Funds,” while drawing from the city’s excess reserves only if needed to fully fund the city’s public safety pensions.
The policy, Mortell argued, was not reflected in recent city budgets, including the 2026 budget, which initially called for a significant increase in property taxes to cover rising pension costs.
“If we would just follow what the policy said, we would not have that confusion,” about increasing property taxes to fund the pension, Mortell said.
Mortell pointed to a part in the policy that advises the city to only raise property taxes to cover the pension “if there are not excess reserves available.”
In May 2024, the city considered a proposal that would’ve created an escrow account for 100% of the PPRT revenue to be set aside and used exclusively for public safety pensions, but the Finance and Budget Committee shot the plan down in a 2-4 vote.
On Wednesday, the committee appeared to finally settle the issue, agreed to revise the city’s policy to clarify how to use the PPRT revenue, explicitly saying:
The maximum amount of Personal Property Replacement Tax (PPRT) statutorily allowed by the State of Illinois shall be applied to public safety pensions prior to other funding sources. The maximum amount will be reduced by 11.3% of PPRT until such a time the City’s potential liability to the library toward PPRT is resolved.
The caveat included in the language Wednesday night was because of an ongoing claim by the Evanston Public Library that the library lays claim to a share of the tax, something Kelly had argued it doesn’t and had been arbitrarily allocated PPRT revenue in the past.
The PPRT was established by the state in the 1970s to replace money that cities lost when their authority to “impose personal property taxes on corporations, partnerships, and other business entities [was] taken away.”
“It’s really important that we earmark revenue streams, and I would advocate that we find more,” Kelly said, pushing back on a comment from her colleague, Ald. Jonathan Nieuwsma (4th), who has been looking to put the discussion to rest after years of back and forth.
“I find this conversation once again kind of wholly unnecessary,” Nieuwsma said. “What’s being proposed doesn’t solve a problem because there is no problem.”
Nieuwsma, along with committee member David Livingston, both argued that the $2 million in question in the context of a $30 million expenditure, already short of a clear long-term revenue source, was a trivial discussion.
“The fundamental issue is we have $20 million of existing property taxes,” Livingston said. “But we still have a major $8 million contribution that has to come out of the general fund. The $2 million in and of itself, it’s left pocket right pocket.”
Kelly said the revenue was more “volatile” than her colleagues may had been suggesting.
“I hope we can do this and I hope we can find a couple more sources so that annually we can continue to pay it down without a debate about how to pay it down or whether we’re creating a political football,” Kelly said. “If we leave it out there and it’s put like it was last time, ‘let’s raise the taxes to pay this?’ that jeopardizes the long-term stability of this.”
Kelly successfully lobbied her council colleagues to approve a city budget last November with a smaller hike in property taxes, arguing that the increase was not necessary given sufficient excess reserves and PPRT revenue.
The result, however, left the city with a projected fund balance of $35.2 million, just above the required 16.66% requirement per city code, but on pace to dip below the red line next year. Staff warned that a larger property tax hike would be needed unless other revenue sources are found.
Nieuwsma said he was supportive of “adopting the specific language of the PPRT section, just so we can put this behind us.”
The revised policy language agreed to Wednesday night will go before the full City Council for consideration.