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Budget Brief: 2014 Proposed City of Milwaukee Budget

If it was not clear in previous budgets, the importance of the decision to build a sizable pension reserve fund in the aftermath of the economic recession shines through in the City of Milwaukee’s 2014 proposed budget.  Recognizing the challenges to come after the 2008 stock market plunge, city leaders took steps to shield key programs and services from the potentially devastating consequences of a huge new annual pension obligation.  Foremost among those steps was a decision to contribute more than $40 million to a pension reserve over 2011 and 2012 to prepare for a 2013 employer contribution that was projected to rise by more than $60 million.

While the pension obligation remains daunting – at nearly $62 million for the employer share in 2014 – the impacts have been alleviated by withdrawals from the pension reserve, as well as recent policy changes that eliminate wide swings in annual pension payments.  In fact, the city’s budget planning was so in tune with its short-term financial needs that the general purpose budget actually increases in 2014, despite the ongoing challenges associated with pension costs and flat state revenues.  This task is accomplished not only through the use of the pension reserve, but also through heightened use of the tax stabilization fund (TSF), increases in charges for services, reductions to tax levy-supported debt service, and a modest property tax levy increase.

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