DeKalb city leaders are pushing for state pension reform to help shore up what they call “structural problems” in their 2026 budget.

DeKalb city staff acknowledged during a recent special joint meeting of the City Council and Finance Advisory Commission that they expect to run into budget shortfalls by 2034 due to pension obligations.

For years, city leaders have been grappling with potential shortfalls between property taxes and what the city owes, officials said.

Mayor Cohen Barnes said the city has a growing problem.

“We have a shortfall between ... all the property taxes that the city of DeKalb receives, all that economic development on the south side goes directly toward the police and fire crisis, and it’s not enough,” Barnes said.

In 2026, it is estimated that the city will have a shortfall of about $1.8 million, below its $10.8 million actuarial obligation, city documents show.

City Manager Bill Nicklas said the city usually shores up the difference in budget responsibilities using funds from its reserves. The city of DeKalb has for years used all it collects in property tax revenue to pay pensions.

“We pay for that out of our [General Fund] balance, so that the taxpayers don’t have to get a levy that will drive the rate up that falls against their property’s value,” Nicklas said. “We’ve been doing that consistently for some time now.”

Staff project the city won’t be able to continue its practice of meeting the 100% funding target each year, with pension obligations increasing and General Fund balance diminishing over the next 10 years, documents show. The city’s pension obligations need to be 90% funded by 2040.

Meanwhile, the city continues to prioritize increased public safety staffing levels with each budget.

Last year, the budget called for 75 police officers and 71 firefighters.

In 2026, the city is requesting proposed funds for 75 police officers and 75 firefighters, city documents show.

Barnes said the city’s public safety spending is not at issue.

“That has nothing to do with our amazing police officers and firefighters,” Barnes said. “This is our state legislature mismanaging money and people in the past mismanaging money that got us in this position.”

This issue is not unique to DeKalb. Municipalities across the state are grappling with how to pay their police and fire pension liabilities.

Nicklas said something has to give.

“The resolution of this challenge for us is beyond our own means at this point,” Nicklas said. “I can say that we have allies in trying to find a way out of this. Part of that is amortizing the system and the debt at all levels in a slightly different way. We have a closed amortization system, which assumes everybody dies in 2040.”