ICYMI: The Reinvention of Tom Barrett Continues

FOR IMMEDIATE RELEASE July 21, 2010 Contact: Jill Bader (414) 453-2010 Email: Twitter: @JillBader

ICYMI: The Reinvention of Tom Barrett Continues Barrett continues to run away from his record of high taxing, high spending

Barrett seeks to avoid increases in property tax, user fees - Milwaukee Journal Sentinel Milwaukee mayor is writing his 2011 budget while running for governor By Larry Sandler Wednesday, July 21, 2010 

For the first time since he was elected, Milwaukee Mayor Tom Barrett is trying to craft a city budget that doesn't raise either property taxes or major user fees - right in the middle of his campaign for governor.

Barrett and his aides say the zero-tax-increase goal isn't politically motivated and has more to do with the economy and the city pension fund than the election.

"The economic recovery has been slow and people are still hurting," Barrett said Tuesday.

But Barrett, the likely Democratic nominee for governor, will introduce his 2011 budget just 5 1/2 weeks before state voters go to the polls Nov. 2. Republicans have been pounding away at the theme that he's raised taxes every year as mayorAnd one of the candidates seeking the GOP nomination, Milwaukee County Executive Scott Walker, has recommended zero-tax-increase county budgets every year he's been in office, although the County Board has nonetheless raised taxes over Walker's vetoes.

"Obviously, it's an incredible election-year conversion for a guy who's proposed a property tax increase every year," said Walker, who will face former U.S. Rep. Mark Neumann in the Sept. 14 Republican primary. "It would have been nice for him to act on this sooner, so the people of Milwaukee didn't have to suffer so much."

Neumann sounded a similar theme, saying, "Better late than never. . . . The bottom line is that he's increased spending 31% in his first five budgets. The only place government gets money is from the taxpayers . . . and they're the ones who are paying for it."

At this point, holding the line on taxes and fees is a goal, not a commitment, city budget director Mark Nicolini said. Reaching that goal would require significant trimming of city agencies' budget requests, which total $1.61 billion, up from $1.44 billion in spending this year. If the mayor and Common Council granted all those requests - something that never happens - the property tax levy would rise $50 million, from $246.8 million to $296.8 million.

This time, however, Barrett has a $49 million cushion that he didn't have in previous years.

The 2008 stock market collapse sliced the value of the city pension fund's investments by one-third, spurring Barrett and aldermen to cut spending and raise taxes and fees to make a required $49 million employer contribution to the fund in the 2010 budget. But stocks rebounded in 2009 and the fund finished the year with 112.8% of the amount needed to pay all future obligations, said Jerry Allen, pension system executive director. That means no employer contribution will be needed for the 2011 budget, Allen said.

Easing big swings

Even though no contribution is required, Barrett still plans to budget for some pension contribution, maybe $14 million or $15 million, he and Nicolini said. Projections show a contribution will next be required in 2013, and city officials want to avoid, or at least ease, future spikes that would force big tax increases or spending cuts.

But even a $15 million voluntary pension contribution would leave $34 million to boost spending without raising taxes and fees. Most agency spending requests reflect increasing costs to continue existing services, largely because of rising employee health care costs, rather than new programs, Nicolini said.

Barrett plans to seek the same number of unpaid furlough days as this year - four days off for most city employees, including elected officials, two days off for sworn police officers and no furloughs for firefighters - city economist Dennis Yaccarino said. The city's largest union, American Federation of State, County and Municipal Employees District Council 48, has a no-layoff guarantee in its contract, and it's too early to tell whether Barrett will recommend layoffs for other workers, said his chief of staff, Patrick Curley.

The mayor and other city officials rejected the idea that Barrett might have manipulated the situation to his political advantage.

"If I were interested in only advancing my political career at the expense of others, I could have said we're not making any pension payment (for 2011) and then posed for the holy pictures, similar to what the county is doing," Barrett said. That was a reference to Walker's pension borrowing plan, an approach that city officials rejected.

Partly in response to last year's pension funding gap, the Pension Board changed its rules to spread losses over five years, instead of three. That reduced the contribution for the 2010 budget, but it means the 2008 loss will loom over city budgeting through the 2014 spending plan, said City Comptroller W. Martin "Wally" Morics, the pension board chairman.

Even with the 2010 contribution in the bank and the 2011 contribution wiped out by investment gains, officials still have to cover 60% of the 2008 loss in the years to come, noted Morics, the city's elected fiscal watchdog. With major pension obligations ahead, the city needs thoughtful long-term financial planning, said Barrett, Morics and Ald. Michael Murphy, chairman of the Finance and Personnel Committee.

"I don't want us to be in the position that the county's in now, where they're borrowing to pay their benefit obligations," Murphy said.

Morics and Murphy, a pension board member, said they didn't see any political influence on the pension funding decisions.

Nicolini will discuss the city's fiscal condition with the council's Finance and Personnel Committee on Wednesday.



• 2010 city budget: $1.44 billion

• 2011 budget requests*: $1.61 billion

• 2010 city tax levy: $246.8 million

• 2011 levy requests*: $296.8 million

• 2010 required employer pension contribution: $49 million

• 2011 required employer pension contribution: None

*Requests from city agency chiefs, subject to action by mayor and Common Council

Source: City budget office

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