Unfriendly forecast: Rising pension costs cause bleak budget outlook

MILWAUKEE -- Milwaukee Mayor Tom Barrett said this week he's frustrated with his own budget. It calls for the elimination of more than 30 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 city's fund. The pension board director said Thursday a single projection has a $22 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.

Allen said 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 about 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. Fire Chief Mark Rohlfing said Tuesday the proposed budget would force MFD to close six stations as it's written.

Milwaukee Budget Manager, Dennis Yaccarino, said 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 said the budget has $315,000 in parking revenue going to the streetcar but that's it. Yaccarino said most of the streetcar funding is coming from federal grants while operating costs are also coming from Tax Incremental Financing districts set up downtown along the route.

In theory, those districts will see property values rise and once those costs are paid off, the money goes into the general fund. Critics have argued those costs won't be covered because of low ridership.

Even if the streetcar is a relatively small part of the budget, a FOX6 reporter asked Yaccarino if there's anything else in the city that could be cut before public safety.

"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.

Barrett continues to ask state lawmakers to allow for a special election where city  residents would vote on a half-cent public safety sales tax. The leaders of both the police and fire unions said Tuesday they're open to that but want to see an exact plan for how the city would spend that money first.