The Milwaukee County board this week approved a $1.4 billion budget that paves the way for a $400 million pension obligation bond issue.

The board rejected most of County Executive Scott Walker’s plans to privatize a series of county services and his efforts to hold the property tax levy steady at $250 million. The board increased the levy by 3.1% to $257.7 million. It also rejected a proposal to spend $500,000 to hire consultants to work on a possible long-term lease of Mitchell International Airport.

“It’s a difficult balance, but we did a great job in keeping our costs down while resisting many of the fee increases and outsourcing the county executive had proposed,” board chairman Lee Holloway said. “We have crafted a budget that is progressive.”

Walker said in a statement that he is reviewing the budget for possible vetoes. “Our budget attacked the structural deficit by enacting reforms and moving to contract for more services from outside county government,” he said. “Now more than ever, leaders must decide whether county government is an employment service or a provider of core services.”

The county is working on a $400 million pension obligation issue aimed at smoothing out over the long-term the growing burden of its unfunded pension liability that, due to recent market losses, has risen to $700 million from $406 million, although that is not an actuarial-based assessment.

The bond sale is aimed at bringing the funded pension ratio up to about 95% based on the last actuarial study. County finance officials decided to stick with the $400 million borrowing level as the most affordable even though the market study shows a significant spike in the unfunded ratio.

JPMorgan is senior manager and Citi and Loop Capital Markets LLC are also serving as underwriters. Public Financial Management Inc. is financial adviser.

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