The Champaign City Council voted unanimously in favor of discontinuing consideration of pension obligation bonds during a study session on Tuesday night.

According to Champaign Finance Director Richard Schnuer, the proposed bonds would have reduced the city’s annual contributions to the pensions of fire and police by about $400,000. It is an alternative to future budget reductions and service reductions by issuing a 10-year debt to the city.

However, taking out a loan would present financial risks to the city including investment risks, loss of flexibility, extending a term of debt and the potential for increased cost of future debts.

Mayoral candidate Don Gerard has been a huge supporter of the bonds and said they were a huge part of his budget proposal.

He tweeted Tuesday afternoon about the vote: “Mayor to vote tonight on gambling with the safety of the community to meet budget goals.”

Gerard addressed the council and Schnuer and expressed his displeasure that Schnuer had not looked at the pension obligation bonds a year ago.

“About 15 municipalities have used this successfully. I think it’s a shame that a year ago this could’ve been a great opportunity and I am very disappointed that it was not looked at earlier,” Gerard said.

Michael LaDue, council member District 2, dismissed the idea of it being Schnuer’s fault that it was not looked at before now and pointed out that the council is the one who called for the study session now. He added that, for a community the size of Champaign, he “does not think it is hyperbole to say they have had spectacular success” in dealing with the recession in the past.

Deborah Frank Feinen, council member at-large, said she Googled pension obligation bonds and saw things that called them “the granddaddy of bad pension finance.” Marci Dodds, council member District 4, called the bonds essentially the city’s version of a home equity loan.

“We’re not desperate, so there’s no reason to look it or act it,” Dodds said.

Tom Bruno, council member at-large, said there are approximately 18,220 municipalities in the country, which leaves 18,200 that have not gone the route of obligation bonds.

“We should feel the pain for the recession and my kids shouldn’t feel the price years down the line,” Bruno said. “We shouldn’t be gambling with other people’s money.”

The council also voted against an ordinance that would have appointed a temporary lieutenant in the police department. Karen Foster, council member at-large, said that she voted against the ordinance because it would increase the budget by $13,336 at the same time the council is being asked to make cuts.