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Mayor proposes elimination of insurance subsidies to retirees

Wayne Motley

Wayne Motley

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Updated: March 9, 2014 6:04AM

The city’s 144 retired employees would no longer receive subsidies for health insurance under a measure that was forwarded by Mayor Wayne Motley this week but stalled by 8th Ward Ald. William Valko, who, like Motley, is a retired Waukegan Police officer.

While Motley argued that the move would save the city some $300,000 in costs this year — an amount that he said could be rolled into public-safety revenues — Valko objected to the idea of eliminating the subsidies completely as of June 1.

“What that (amount) means to me is 15 new squad cars and seven new police officers,” Motley said as the proposal was debated by the City Council on Monday, Feb. 3. “If we want to progress and move forward, we need to do what everyone else in Lake County is doing, and that is not subsidizing retirees’ insurance.”

“I totally agree with you. We’re on the same page,” Valko responded. “I just don’t like the way we’re doing this.”

Lobbying for a graduating decrease over a period of two or three years, Valko added that with long-term savings, “we can buy all the squad cars and hire all the policemen we want. I just don’t want to throw these people under the bus.”

According to information reported when Motley first discussed the concept of eliminating subsidies in November, the city spent $1.4 million on the retiree health insurance in 2012, and the long-term liability associated with the subsidies was $11 million.

The city started winnowing down retiree health benefits in 2003, when payments were in the 50-percent range. The current arrangement calls for Waukegan to pay 25 percent for employees who retired before 2006, along with their spouses, and 10 percent for those who have retired since then.

Both Motley and 3rd Ward Ald. Gregory Moisio said the information provided to them by financial consultants in recent weeks indicates that some retirees would be able to acquire less-expensive premiums in the marketplace and through Medicare.

“I don’t know what the number is, but for some of our retirees, it’s going to be cheaper for them to not have the city’s insurance. (For) some of them at a certain age, it’s going to be a lot cheaper,” said Moisio, adding that he would like to see the city set up informational sessions to help affected former employees understand their options.

“The federal government, and, for lack of a better word, Obamacare, will help you find insurance policies,” Moisio said. “When you talk about health care, people get very emotional, they get very attached to it. They get very concerned and nervous when you make any change to their health care. ... I want to make sure we treat these people the right way.”

Indicating his support for eliminating the subsidies, 1st Ward Ald. Sam Cunningham said 53 percent of the 144 municipal retirees no longer live in Waukegan and “are not contributing, in my opinion, to our economy.”

“Why are we going to subsidize for people who don’t live here? That’s the rationale that I use,” Cunningham said, who added that after subsidies were cut in the last decade, more recent retirees “should have realized a long time ago (that) this was already in the making.”

Ninth Ward Ald. Rafael Rivera, who retired from a 35-year career with the Illinois Tollway, said his health insurance was subsidized by the state until last year.

“Why? Obviously, with the state being in tough economic conditions, they had to cut that back,” Rivera said. “I support what the mayor is doing. The cost (of subsidies) is unbelieveable, and it’s not fair to the taxpayers.”

At the end of the discussion, the council honored Valko’s request to table the concept for more study on implementing a gradual scaledown of the subsidies.

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