Lawmakers resist bills aimed at retiree plans
LANSING (AP) — Gov. Rick Snyder and top Republican lawmakers on Wednesday were struggling to gain support for bills that would prompt municipalities to better fund their pension and retiree health care plans, as opponents criticized a provision that could ultimately lead to state intervention in communities that are unable or unwilling to act.
The Republican governor said appointing “very limited” emergency financial teams in municipalities would only be a last resort to shore up retirement funding. But critics warned it could lead to the alteration of union contracts and benefit cuts for first responders.
“That is absolutely not acceptable and I will never support it,” said GOP Sen. Rick Jones of Grand Ledge, a former county sheriff.
Legislative leaders planned to convene into the night while on the hunt for yes votes in the Republican-led House and Senate. Democrats and many Republicans were lining up against the legislation, and police and firefighters voice their opposition to lawmakers inside the Capitol.
Snyder, who wants local governments to get a handle on billions of dollars of liabilities, said “this is an issue that doesn’t get better with time. This is an issue that’s only growing in terms of potential risk to retirees and local government.”
The nearly 600 Michigan municipalities that offer pensions have unfunded liabilities totaling $7.4 billion, and 180 have funding ratios below 60 percent, according to a task force reported produced for Snyder in the summer. The roughly 340 governments that provide retiree health care have $10.1 billion in unfunded obligations, with average funding ratios of 19 percent.
Snyder, whose use of an existing emergency manager law to appoint state managers to run financially distressed cities has come under criticism, defended the proposed management teams and said their powers would be “very limited.”
“If we don’t have a program like this and communities are in dire straits, they could end up in traditional emergency management,” he said. “Wouldn’t it be better to have a limited version rather than a full version?”
During a five-stage process, communities with no plans to address significantly underfunded pension or health care plans would have to submit planned “corrective actions” to a new Local Government Retirement Stability Board comprised of three gubernatorial appointees.