Michael Horne
Plenty of Horne

Barrett Pleads for Businesses to Support Residency Rules

It's in your self-interest to lobby against this law, Barrett tells businesses.

By - May 1st, 2013 02:27 pm

“I still feel very strongly about the residency requirement on many, many levels,” Mayor Tom  Barrett says. This was during a recent interview with this reporter at his City Hall office.

He was particularly concerned that the proposal to prohibit municipalities from having residency requirements is part of the budget bill rather than free-standing bill by itself. The legislature refused to even permit a motion to removing this provision from the budget bill. The residency requirement was among 58 other non-fiscal policy items included in the Scott Walker budget bill identified by the Legislative Fiscal Bureau.

But none could have as deleterious effect as the change in the residency law. The mayor feels it could spell the death of the city if hordes of public safety officers leave the city. The ripple effect could challenge the city’s very ability to pay the wages and pension benefits of those employees. And, it could add untold millions of additional expenses since it would remove what the mayor feels is one of his few remaining bargaining chips, since police and fire unions were not exempted from collective bargaining, as were other city employees.

His reasoning goes like this: “[In 2011] the Governor made the decision to require [most] employees to pay into their pension accounts. The governor also decided to take away their bargaining rights. But the Governor retained those [bargaining] rights for public safety employees. … By retaining the rights to the Police Department and the Fire Department, he has endorsed the concept of collective bargaining for those individuals.”

But the concept of collective bargaining implies that each side brings something to the table, so that neither party can dominate the other. Barrett says the residency requirement is one of his negotiating tools. In fact, it is one of his biggest tools.

One reason the mayor can afford to pay his public safety workers an average of $65,649 [police] and $67,554 [fire department] is that by requiring them to reside in the city, their $177 million collective income helps support the city, though payment of local property taxes and spending at local businesses that in turn may pay taxes directly to the city or may employ people who may also pay taxes to the city.

That money has become all the more important as state shared revenue payments to Milwaukee have declined. Back in 1995, the city’s $224 million shared revenue payment was sufficient to fund the entire police and fire department budgets, with some money left over; today, it falls $114 million short.  If the police and firefighters move out, where will the Mayor find the money to pay for these essential services? he wonders. Increasing the tax burden on remaining citizens and businesses would be the only option in the absence of other revenue sources, and this would only exacerbate a downward spiral.

If the police and fire department employees tend to live in a home of average value here, which the city assessor puts at $100,844, the city portion of their property tax would amount to about $3 million. The Milwaukee Public Schools allotment would be even more, say, $3,227,613. That is another $6,000,000 plus that Barrett can use to pay to hire police and fire fighters and run the schools,  and another reason why the residency requirement is a key bargaining tool, he says.

“If business people are unhappy about the level of benefits and taxes they pay, then they have to be aware that  in collective bargaining, one of my most effective bargaining tools is residency. Why should I give this up for nothing?” the mayor adds. “What business would allow itself to be forced into this position without some form of compensation?”

Barrett points out that 60 percent of the city’s tax revenue goes to the Police and Fire Department, which also account for 69 per cent of the city’s pension liability.

Speaking of the Republicans in general and the business establishment in particular, “How can they complain about taxes if they are taking away one of my most important tools and giving it away for nothing?” he asks.

“From virtually every angle — Democrat, Republican or policy, it is the wrong thing to do,” Barrett said, issuing a call for the city’s business leaders to join in some non-profits’ calls to retain the residency rule.

“Businesses in this city who are not speaking out are acting contrary to their self-interest,” he says.

On Tuesday, April 30th, 2013, Barrett asked citizens to link to his website to find out how to file an objection to the residency plan with their legislators.

Wisconsin Paperboard Rebrands

The Wisconsin Paperboard Factory at 1514 E. Thomas Street is an East Side anomaly. It is the only industrial property of any account on the East Side, and certainly the only one operating on the banks of the Milwaukee River, where its 18-acre site is the same size as the White House grounds. The huge building that sits on the site operates 24/7, recycling mostly scrap paperboard and turning it into mostly new paperboard.

New logo

New logo

The property has been owned and operated for years by the Newark Group, founded in 1912. Today, the company unveiled a new logo.  “Our new logo communicates what Newark stands for today,” says Newark CEO and President Frank Papa. “This is not the same company it was a few short years ago; we have invested in new talent and new equipment to better serve our customers and vendors, and become a leader in this industry.”

Papa understates the changes at Newark considerably. What has happened there is nothing short of a coup, with the controlling family banished from the firm, and its history. For years, the Newark Group was headed by Edward K. Mullen, who assembled paper mills and recycling centers around the globe into his privately owned business. He was listed in corporate documents as the “principal stockholder” of the concern. Later, the reins were turned over to his son, Robert H. Mullen, who assumed the titles of CEO, President and Chairman of the Board in 2004.

Things looked very good then for young Mullen, who joined the firm in 1984, after receiving his BA in Philosophy and Physics. (While a college student, he spent one summer working at the plant in Milwaukee. He told a co-worker that he wanted to become a physicist. “Then why in the hell are you working in a paper factory?” the worker responded, knowing full well it was because dad owned the place, and the son was the heir-apparent.)

But as the company expanded, it acquired significant debt. In 2008, things began spiraling out of control when the company’s bond rating was reduced to junk status. In June, 2010, the company filed for Chapter 11 bankruptcy, from which it emerged a mere 51 days later. “We emerge from Chapter 11 a well capitalized private company with a much improved operating profile,” Mullen said.

Meanwhile, as the Milwaukee plant, a non-union concern, continued to pump profits into the company, the Newark Group closed a number of other facilities around the country. Then, on May 20th, 2011, the board of directors “accepted the resignation” of Robert Mullen as CEO, President and Chief Executive Officer of Newark Group, and the Mullen family completely disappeared from the website history of the Newark Group. Robert H. Mullen became president of TTA Marine in June 2012. In his biography on the website of the New York-based maritime services company, he makes no mention of the Newark Group by name, or that he was the son of its principal owner, and presumably its heir.

It reads, instead, quite simply: “He began his career as a trainee in an entry level manufacturing job. He worked his way through many sales and manufacturing roles ultimately becoming the CEO.”

What’s It Worth?

Thanks to a tax court ruling known as the “Newark Decision,” all real estate, buildings, improvement and equipment are exempt from taxation if waste treatment is performed on the site. This 2005 ruling vastly expanded a 1953 rule and effectively removed the Wisconsin Paperboard Company’s Thomas Avenue plant from the real estate rolls. There is only a nominal $100 value placed on the hundreds of thousands of square feet of improvements at the plant. The land, however, is not exempt from taxation, and is valued at $6,216,900, and produced 2012 tax revenue of $104,547.33, which the cash-strapped company pays on the installment plan.

Of Bars and Licenses 

The Milwaukee Common Council has introduced a series of changes in the laws for Class “B” Tavern licenses. Registered agents now have a grab bag of  entertainment options to select from on their applications. And there is increasing neighborhood scrutiny of tavern licenses, with particular concern on the East Side these days about “Pub Crawls.” For example, Patricia Jensen, who hopes to operate Glass Nickel pizza at 1504 E. North Ave., the site of the short-lived Clutch, promised that she would sponsor no pub crawls at her establishment. This helped gain the approval of the East Bank Neighborhood Association, represented by its president, Andrea Rowe Richards, a former Department of City Development spokesperson and wife of Rep. Jon Richards.

Ms. Richards also gave the neighborhood group’s thumbs up to Kyle Y. Johnson, who hopes to open the Irish Genie on the banks of the Milwaukee River, at 1431 E. North Ave. This site, at the foot of the North Avenue Bridge, was the longtime location of Judge’s Irish Pub. “No pub crawl,” Johnson promised the Licenses Committee, under the charge of Chairman Anthony Zielinski. (But the bar does plan to have two mini-bowling lanes — take that Koz’s Mini Bowl!) … On the other side of the river, where collegiate pub crawls are not so much of an issue, Tommy Harris plans to open Bosses Lounge at 408 E. North Ave. … Meanwhile, an extended hours license for Shubh Mobil gas station, 714 N. 27th St., was denied after police and neighborhood objections, one of the objectors being Ald. Bob Bauman, who has long been vocal in criticizing this place as a blighting influence in his district.

Categories: Plenty of Horne

16 thoughts on “Plenty of Horne: Barrett Pleads for Businesses to Support Residency Rules”

  1. Mike says:

    Mr. Mayor,

    If you want business to support you it would be nice if you supported the businesses here. You were MIA on the Palermo’s issue. You were tepid at best in trying to get BuySeasons to expand here. You sort of seemed bothered that the MMAC had to bully you into being against the sick pay ordinance.

  2. Dave K. says:

    Would it be legal to pay two tiers of wages? Could we pay the out-of-town employees significantly lower wages? I feel like the employees should have the right to choose where they live, but the city should have the right to pay them 50% less if they live outside of the city. There will be a cost to the city if they leave, why can’t we pass that cost on to the employee and not to the taxpayers? Likewise, there’s a benefit to the city if they stay and the employee should be rewarded as such.

  3. Sara Curley says:

    Run a city that people “GET” to live!!!

    Forcing people to live somewhere is just wrong.

    It’s time to tear down this wall!!!!

  4. David Ciepluch says:

    Any public employee like Police and Fire-control always have always had a free choice option to take their taxpayer supported training certifications and services expertise and seek gainful employment elsewhere in the public or private sector if they do not like Milwaukee conditions of employment or the urban lifestyle. Just like any other private sector employee that wants to live elsewhere. That has been the free choice option of the majority of citizens. Milwaukee citizens have a right to retain the residency requirement as a matter of local control.

  5. Tim says:

    The opponents of the residency relief will scream that people should have choices!!!

    Women’s right to choose what she wants to do with her body etc etc. But when given the opportunity to choose which school they can send their children to with a voucher vs. the money being dumped into a public school system, the opponents of the relief go mad. Given a choice to live in the city or elsewhere they go mad. It’s all about choices unless you don’t choose what they tell you to choose.

    That sounds a little like a dictatorship vs. a democracy if you ask me.

  6. Randy Zingler says:

    Show me the statistics that prove people will leave. Even Mr. Gorbachav listened back in the 80’s. The Berlin wall stood for 28 years. Hardly a good analogy. Reality, 585,000 people choose to live in Milwaukee. It is a great city. In fact, during the worst economic downturn SINCE the GREAT DEPRESSION, the city of Milwaukee tourism industry has seen a steady increase. (Reference the “City of Milwaukee Annual Financial Report” under the City Comptroller – it is a mandatory report annually – Ill send you the link). In fact, tourism, as is the case in the entire state, is one of the biggest industries in Milwaukee. Milwaukee is fantastic and brings many people to our great city.

  7. Steve Yorlinski says:

    My employer can “transfer” me any time they want. It is my decsion to either move to my job or quit and stay where I am. Businesses can and should be able to dictate conditions of employment and government should have the same rights too.

  8. David Ciepluch says:

    In regards to Tim May’s comment, people already have a free choice of where they can work, go to school and live. They can leave Milwaukee anytime and seek employment in the private or public sector. Tax support provided for their valuable training and experience and other communities may benefit from their chosen profession and training.

    People are already free to seek what you think is a better life elsewhere. I have a preference for public employees supported by our tax funds, that want to live and serve in my Milwaukee community. I am the 5th generation of my family living in Milwaukee since 1882. I have listened to a number of police and firemen complain about life in Milwaukee, and I would rather not have these disgruntled employees looking down on me because I live in the city; and perhaps they now live in Waukesha if residency is lifted. They should leave and seek employment somewhere else. They are not worried about my property value or quality of life if residency is lifted. This is a local control issue.

  9. Sonya says:

    Mike, was Bosses Lounge a renewal or new opening? We shut it down at LEAST once when we lived a couple blocks from it. It might not have had the college student or pub crawl issues, but it had MANY other issues. Just curious if you can elaborate a little more on that one.

  10. Tim says:

    The best employees are leaving and not applying for these jobs. Look at the MPS results need I say more? Do you think the suburbs are cherry picking Milwaukee’s worst teachers, cops, and firefighters? No the best and brightest are leaving. As tax payers we need to stop this. We need better cops, firefighters, and teachers working for the city and lifting the residency requirement will achieve that. It’s time. Teachers want residency lifted more than the cops and firefighters!! It’s about making Milwaukee great.
    People should “GET” to live here not forced too!!!

  11. Dan says:

    Hey Michael, you make it sound like Bosses is newly opening or was previously closed. That should be a renewal you’re referring to. Bosses has been operating under Harris’s ownership for quite some time. In 2010 there was a lot of trouble there, including several shootings with multiple victims. Neighbors reacted strongly to that but ultimately worked with Harris to get things under control with age and capacity restrictions, IIRC. It was never closed, but they reduced their hours and upped the age requirement in 2011.

  12. “one of my most effective bargaining tools is residency. Why should I give this up for nothing?” the mayor adds.” Why didn’t you bargain it?!? In 2011 Barrett asked the police union to submit to a 6 percent wage concession, they agreed if residency was on the table. He left 6 percent on the table for 2011, 2012, and 2013. This is all Tom Barrett fault for not bargaining in good faith.

  13. David Ciepluch says:

    Tim May – people are not forced to live here. They have a free choice to leave and seek employment anywhere else. They do not own the job. Milwaukee is the employer and does not have a problem filling positions with many qualified people. As a 5th generation tax paying resident of Milwaukee, I do not want public workers that dislike it here, continually trash talk our community and the quality of life here. Do you really think they would provide Milwaukee residents the quality of service and respect, and dignity they deserve? I do not think so.

  14. ann zion says:

    Two thoughts: I do agree w/the Mayor that this issue should stand alone, and not be rolled into the Budget Bill. However, that is my only agreement with him.

    No one has mentioned that sellers do not generally abandon their property when they decide to relocate. Most of us can’t afford to buy a more attractive residence without having the proceeds from the property being left. and….a new home might be more attractive for many reasons: growing family needs more room, downsizing family needs less room, extended family responsibilities would be eased by a relocation, on and on.

    The Mayor seems to assume that there will be a mass exodus from the City if the residency requirement is lifted, and that is pathetic. That mind-set in a leader says that the City is sadly so revealing: that employees must be forced, as a condition of being a City employee, to live there. Thing about that! His assumption makes one want to move fast, to avoid his predicted exodus.

  15. Kyle says:

    David Ciepluch, I have a question for you. Last month, what did you call Tim? Was he Tim April? Will he be Tim June next month? Everyone has the date after their name, even you David Ciepluch May.

    Sorry, but I think that was bothering me more than the residency rule.

  16. Ellen says:

    While I seriously disagree with the approach the Governor is taking to try and end residency requirements (stop backdooring stuff – legislate openly, please). I do think the City of Milwaukee needs to seriously consider the residency requirement and NOT just for police and fire. Do not create more separation between City employees — it isn’t fair and it only creates a greater divide between sworn and civilian staff. If the Governor actually wanted to work WITH local communities, he would stop trying to push through legislation in a vacuum. If he really wants to offer “freedom” to public employees at the local level, the Governor and legistalture should remove the constitutional restriction in local communities being able to charge income and sales taxes and allow the City of Milwaukee and others with residency requirements to use a carrot and not a stick approach to encouraging employees to live in the City. Other cities across the US often charge local income taxes on anyone who works in the community but doesn’t reside there. Other cities give property tax, home buying and even home improvement incentives to public staff who live in the community they work it. There are other ways to encourage this besides making an arbitrary requirement or worse, making only certain employees work under the requirement and others do not. The City should not be afraid to take a candid look at the residency requirement for ALL of its employees, not just those (police and fire) who went unscathed under Act 10.

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