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City Of Milwaukee's Pension System Task Force Identifies 12 Ideas To Address Financial Challenges
A final report by the Mayor's Task Force on the City of Milwaukee's Pension System identified 12 ideas Mayor Tom Barrett should consider to address financial challenges related to the city pension plan.
City Of Milwaukee's Pension System Task Force Identifies 12 Ideas To Address Financial Challenges
A final report by the Mayor's Task Force on the City of Milwaukee's Pension System identified 12 ideas Mayor Tom Barrett should consider to address financial challenges related to the city pension plan.
Barrett empaneled the 17-member task force in June with the mission of addressing financial challenges stemming from the city's Employees' Retirement System. He said at the time that the budgetary impact of managing the pension systems' growing costs was approaching $140 million annually, an amount he called “simply unsustainable.”
Among the ideas offered by the task force: Closing the city pension plan to new entrants and having them instead join the state's retirement program; creating a new design and benefits structure for new entrants; and reducing city services and staffing.
The last point had no support on the task force, the report noted. However, the task force calculated Milwaukee could have to lay off 1,300 employees—24% of its municipal workers— between 2023 and 2025 to pay the city's annual pension contribution if changes aren't made to funding requirements, according to a report from a pension task force.
“This concept was put forward with the full knowledge that it is undesirable but may become a reality without changes to pension funding requirements or increased revenue capacity,” the report said. “The task force sees these reductions as an absolute worst-case scenario, but members saw value in having a more detailed understanding of where and how these budget reductions would be made to sustain significant increases in pension funding requirements starting in 2023.”
When he launched the task force, Barrett noted that his administration has worked over the past ten years to manage the growing costs of the city's pension system through benefit adjustments, contribution smoothing, and new revenue options. “To date, nothing has sufficiently addressed the problem,” he said.
According to the task force's report, meeting the current projections for pension funding increases requires an additional $77 million per year from 2023 to 2027.
The task force said one way the city could pay for its pension contributions would be to implement a local 0.5% sales tax, which would generate an additional $43.7 million in annual revenue. It also said that at 1.5%, or $1.50 per $100 in taxable sales, the tax could raise $131 million per year.
“That amount would be more than enough to provide both reliefs from current pension funding costs as well as additional funding for property tax reductions, economic development, and even city service expansions,” the report said.
You might also like: North Carolina Teachers' & State Employees' Retirement System Seeks COLA; Fast Forward on the Front Lines: Minnesota.
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