Discussions between GOP state Sen. Dale Kooyenga, Milwaukee leaders could offer way forward with pension crisis looming

The state relief that cash-strapped Milwaukee and Milwaukee County have been calling for could come to fruition after all — but there's a long road ahead and many details yet to work out.

Chief among them is whether the city can commit long-term to maintaining its police force, which has declined in recent years as budget pressures have grown.

State Sen. Dale Kooyenga, R-Brookfield, at a panel discussion Tuesday raised the possibility that the state could permit the sales tax increase local leaders have been seeking, allowing the city and county to address pressing pension obligations while lowering property taxes.

Subscribe to our On Wisconsin Politics newsletter for the week's political news explained.

But Kooyenga said he needed a commitment that the city wouldn't cut police positions given concerns about crime.

That's a promise Mayor Tom Barrett said he's unable to make for the long term due to the city's fiscal challenges, though he floated the idea of implementing a different structure in which the state would help support public safety services in the city.

Between Milwaukee and Milwaukee County, it is the city that is facing the more immediate financial challenge. A significant increase in its annual pension contribution starting in 2023 could require a quarter of the city's workforce to be let go between 2023 and 2025, a report from the city's Pension Task Force found.

That leaves city leaders less than a year before they're making final decisions on the 2023 budget, though federal pandemic relief could lessen the blow for a few years.

Already the city's fiscal pressures have led to cuts in police positions through attrition, including 60 in 2020 and 120 in the 2021 budget. In 2022, the department's sworn strength is expected to drop by about two dozen to 1,657 on average over the course of the year.

The city's cuts to the police and fire departments are not philosophical but rather fiscal, Common Council President Cavalier Johnson said during the panel discussion that also included County Executive David Crowley.

"We've seen this problem progress and get incrementally worse as we get closer to that 2023 date," he said. "This is having a tremendous impact on our ability to deliver public services, especially as it relates to public safety."

The police and fire departments are two of the city's largest departments and the city's fire and police sworn personnel make up about 80% of the total pension costs.

Crowley said Tuesday that about one-third of the approximately $300 million the county collects in property taxes each year goes toward its pension. It's an element of the financial pressure making it difficult for the county to fund services that are not mandated by the state, including the parks.

Local leaders, including in the business community, have also argued that state limits on revenue generation through measures such as a local sales tax coupled with stagnant shared revenue coming back to the city and county from the state has led to fiscal challenges as costs continue to rise.

"State fiscal constraints have posed a clear and present danger to the quality of life services in Milwaukee," said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce and emcee of the panel discussion at the association's all-member meeting Tuesday night.

"The past decade, the state has broken its commitment to share revenue it collects from growth of sales and income taxes generated here," Sheehy said.

At Tuesday's panel discussion, Kooyenga said while shared revenue has to increase, pensions are the primary problem.

'Soft freeze' floated for city, county pension systems

The city and county each has its own pension system while the widely heralded state retirement system includes not only state employees but also those of most local governments in Wisconsin.

Kooyenga, a certified public accountant, advocated for putting a "soft freeze" on the city and county pension systems. That would mean employees who are already part of the local systems would remain in those systems while new employees would enter the state system.

The purpose of the sales tax would be to address the pension problems and the cuts to public safety services, he said, not to serve as a funding option for other priorities such as cultural assets.

He said including elements such as a commitment to maintaining police sworn strength could help open the door to consideration in the Republican-controlled state Legislature.

Still, Kooyenga told the Journal Sentinel that he didn't think it was likely that a bill would come together soon.

A primary hurdle, he said, is Barrett's inability to commit to ending the decreases to public safety.

"The county's been great to work with and the staff at the city has been good to work with, but I think Mayor Barrett can't make the numbers work for him as far as what we would like to see and what his concerns are," he told the Journal Sentinel.

Kooyenga also noted the nearly $400 million in federal American Rescue Plan Act funds the city is set to receive between this year and next, which could help stave off major service cuts in the next few years depending on how it is used.

Barrett said Wednesday that while he, too, would like to maintain the number of police officers, he did not want to make a commitment that would make it more difficult for the city to maintain all services.

He said he was comfortable with the idea of not making further police cuts for three years, based on the possibility of using ARPA funds and the approximately $82 million the city has saved to ease the spike in the city's pension contribution.

"I'm not comfortable saying we can do it beyond three years without either dramatic cuts in other areas, unless there is a reset button hit with the state," Barrett said.

That reset could take the form of a "public safety maintenance of effort" program in which the state would help the city maintain its police strength, he said. It would be a recognition, Barrett said, that the city does not have the resources to maintain the department at the level the state would like to see.

A sales tax will help the city, but it is not anticipated to address all of the fiscal challenges that are putting pressure on public safety services, he said.

Barrett also acknowledged that he's part of the negotiations even as the city prepares for the likelihood that a new mayor will be taking the helm in the near future. His nomination to become ambassador to Luxembourg is pending in the U.S. Senate.

Once Barrett leaves, Johnson will become acting mayor until an election is held to finish out Barrett's term that ends in 2024. Johnson is one of seven candidates at this point who plan to run for the permanent position.

Other key details of any potential legislation also have yet to be worked out, Kooyenga said. They include provisions such as the amount of the sales tax, when it would sunset, and whether local support would come through a referendum or the votes of local elected officials.

Contact Alison Dirr at 414-224-2383 or adirr@jrn.com. Follow her on Twitter @AlisonDirr.

Our subscribers make this reporting possible. Please consider supporting local journalism by subscribing to the Journal Sentinel at jsonline.com/deal.

DOWNLOAD THE APP: Get the latest news, sports and more

This article originally appeared on Milwaukee Journal Sentinel: Milwaukee leaders, state Senator Dale Kooyenga tackle pension crisis