Mayor Tom Barrett, shown here delivering his annual budget speech to the Common Council last week, on Monday proposed spending about $4.8 million on raises for city workers who were subject to state-mandated pension costs. Common Council President Michael Murphy is in the background. Credit: Mark Hoffman

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The City of Milwaukee's proposed 2015 budget would give pay raises of 3.9% to 2,331 workers next year to compensate them for state-mandated pension contributions, Mayor Tom Barrett said Monday.

The pay increases would cost the city $4.8 million, according to figures released Monday. The city also will eliminate the practice of mandatory furlough days as a budget-saving measure for all non-uniformed employees, at an additional cost of $2.7 million.

Those funds come from the $8 million in savings the city gained from not paying the employee pension contribution in 2015 for the 2,331 workers, according to Budget and Management Director Mark Nicolini.

Barrett said the employees deserve the boost in pay as compensation for the pension contributions after going without wage increases in 2011 and 2012 and contributing more toward health care costs in recent years.

Gov. Scott Walker's signature change in public employee labor law, known as Act 10, bars municipalities from paying the employee share of pension contributions. So all local government employees — except firefighters and most law enforcement officers — are required to contribute half the cost of their pensions, under the law.

In Milwaukee, that amounts to 5.5% of a city worker's pay for those employees hired before Jan. 1 of this year, Nicolini said.

City employees hired after Jan. 1 will contribute 4% based on a higher retirement age and the longer period of time before they would become eligible for retirement benefits. They will be contributing to their pension costs for more years than their older co-workers.

The proposed 3.9% pay increase partially offsets the mandatory pension contribution of non-uniformed workers who will begin pension contributions at the 5.5% rate in 2015, Nicolini said.

Common Council President Michael Murphy said Monday he agreed with the mayor's proposal. Non-uniformed employees have steadily lost income in the last several years when you consider the lack of raises and higher health care contributions, Murphy said.

"To attract and keep good employees, you can't, year after year, tell them they are going to be making less money," he said. "We have to compete with the private marketplace" for new hires.

Despite the 3.9% raise for some employees, they will be making less money than this year due to their 5.5% pension contribution, Murphy said.

No increase in pay is proposed for a group of 712 workers already contributing 5.5% and an additional 187 workers contributing 4%.

Act 10 ended most collective bargaining for most public employees and also increased health care contributions paid by most public employees.

Milwaukee officials had argued Act 10 violated its home rule, a constitutional right of local governments to rule their own affairs, by prohibiting the city from paying its workers' share of pension contributions.

Courts upheld Act 10

On July 31, the Wisconsin Supreme Court upheld Walker's labor legislation when a majority of the court found collective bargaining over a contract with an employer is not a fundamental right for public employees under the constitution. The court ruled in a lawsuit brought by the Madison teachers union and a group of City of Milwaukee employees.

In his annual budget speech last week, Barrett said his proposed 2015 budget "will require all general employees to pay their member contribution."

"Given the sacrifices made by general city employees over the last several years with mandatory furloughs and increases in healthcare contributions, my budget proposal also includes compensation changes for city employees who, as a result of Act 10 and the recent Supreme Court decision, will now have to pay their member contribution," Barrett said in the speech.

But no details of the proposed compensation were available last week, city officials said at the time.

General employees are those who are not uniformed police and firefighters. There are 3,695 general employees. Of those, a total of 2,331 had not contributed to their pensions up to now, according to figures released by Nicolini.

Barrett said he will ask police and firefighters to contribute to their pensions as part of upcoming collective bargaining.

Barrett has proposed a $1.5 billion spending plan for 2015, up $67 million from this year. The basic $738.7 million general fund budget, up $15.3 million from this year, includes daily operating costs and fringe benefits of most departments.

A $413.1 million capital projects and debt service budget, up $11.8 million from this year, includes borrowing for major construction projects and debt repayment.

The $363.1 million enterprise funds and special revenue accounts budget, up $50.3 million from this year, includes spending and revenue for self-supporting services: Milwaukee Water Works, parking and sewers.

The Milwaukee Common Council has scheduled a public hearing on the preliminary 2015 budget. The hearing begins at 6:30 p.m. Oct. 6 in the Common Council Chambers at City Hall.

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