A vote by Minneapolis police pensioners on Tuesday ended the long fight between the city and its police and fire pension funds and handed Mayor R.T. Rybak a crucial component of his no-tax-increase budget.

More than 90 percent of police retirees voted to merge their 121-year-old pension fund into a statewide fund, following the lead of firefighter retirees, who approved the deal over the weekend.

The merger saves the city $17.4 million in 2012 alone, allowing Rybak to propose the first budget without a property tax increase during his tenure.

Council President Barbara Johnson said she was "very happy" to see the merger approved. "I think it settles a lot of issues for the city and pensioners."

The pro-merger vote likely means the end of a five-year-old lawsuit, filed in response to the city's contention that the two funds were padding pensions by improperly including certain items of compensation.

Approval of the merger by the City Council, which lobbied the Legislature to permit it, and by the board of the statewide Public Employees Retirement Association is considered a formality.

The budget proposed Monday by Rybak hinged on the approval of the pension merger. The mayor has yet to release a copy of his proposed budget, with council budget hearings set to begin next week.

An analysis by the Board of Estimate and Taxation showed that a third of properties will still see an increase in property taxes next year, mainly because of the elimination of a state tax credit. Two-thirds of properties would see taxes drop or stay the same.

The full firefighter pension under the closed plan is now $41,479 annually for someone who draws it at age 50 after 25 years on the job. The police fund pays a full retirement benefit of $44,742 annually. Widows are paid a little more than half those amounts.

Those amounts will escalate by 2015 to $64,000 annually. That was negotiated between the city and the funds because the statewide plan provides lower post-retirement increases than were possible under the local plans.

Steve Brandt • 612-673-4438