Pensions

Unfriendly forecast: Rising pension costs cause bleak budget outlook

MILWAUKEE — Milwaukee Mayor Tom Barrett said he’s frustrated with his own budget. It calls for the elimination of police positions and could force six fire stations to close. Barrett blames a sharp increase in pension costs.

The subject of pensions is one that can make your eyes glaze over, but it’s important because thousands of people rely on their pensions and billions of dollars are in the fund. The pension director says a single projection has a $20 million impact on Milwaukee’s budget.

“We’ve had a lot of success here in the past but everyone in our business is now saying, “Don’t expect those investment returns to be as good in the next ten to 30 years,” said Milwaukee Employee Retirement System Director, Jerry Allen.

Jerry Allen says those financial experts are telling the city that long-term, the return on retirement investments will be one-percent less than previous years.

How does a one-percent drop in growth create a $22 million hole? Allen says one percent is a big deal for a system that covers 27,000 active and retired workers.

“The $22 million, as big of a number as it is and that is a big number for us as individuals, the plan itself is valued at over $5 billion currently,” Allen said.

To plug that hole, Mayor Barrett’s proposed budget eliminates 33 police officer positions and 75 firefighter jobs. The fire department says it will force them to close six stations.

Budget Director, Dennis Yaccarino, says critics are wrong to suggest this budget prioritizes the streetcar over public safety.

“There is no tax levy money going toward the streetcar,” Yaccarino said.

Yaccarino says the budget as $315,000 in parking revenue going to the streetcar but that’s it.

“Isn’t there anywhere else in the budget where you can cut before you touch police and fire? We’ve cut those areas for the last ten, 12 — I know the mayor’s been here 13 years, and we’ve recommended cuts for that period of time to departments to support police,” said Yaccarino.

The mayor is still pushing the state to allow for a special election where residents would vote on a half-cent public safety sales tax. The leaders of both the police and fire unions say they’re open to that but want to see an exact plan for how the city would spend that money first.

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