Snyder wants to tackle retiree costs in 2017

By David Eggert
Associated Press

LANSING, Mich. (AP) — Gov. Rick Snyder wants municipalities and labor unions to jointly study how best to tackle retiree health care costs after Republican lawmakers removed a contentious proposal to aggressively curb the benefits from the postelection agenda.

The governor told The Associated Press on Wednesday that an estimated $11 billion in unfunded liabilities in local governments remain an “important issue,” and he plans to create a broad-based, bipartisan task force to “put the facts on the table” early in the next two-year term. The group could be formed in January and be given three or four months to work, with potential legislation to follow.

Snyder had questioned quickly passing the House GOP-sponsored legislation in the “lame-duck” session, but the issue is a priority for him in 2017.

Under the bills, newly hired municipal workers — including police and firefighters who protested the changes — would have no longer qualified for health insurance in retirement and retiree health benefits would have been a prohibited subject in collective bargaining. Local governments could have contributed a maximum of 2 percent of an employee’s base pay into a tax-deferred account such as a health savings plan.
In municipalities that are not funding at least 80 percent of their liabilities, current and future retirees would have had to pay at least 20 percent of the cost of their benefit.

Snyder, a Republican, was largely noncommittal on much of the legislation other than to say he likes a call for more transparency about the liabilities facing individual municipalities.

Lawmakers late Wednesday unanimously sent him a bill that would require municipal retirement systems to give the state annual reports on their unfunded pension and health care costs. Any local government below 60 percent funding would have to report steps it could be taking to reduce unfunded liabilities.

“That was one of the concerns I had with how the dialogue was going, is I think it was too general or too generic,” Snyder said in an interview in his office at the state Capitol. In the future, he said, the issue should be divided into “buckets” — with a focus on how well individual local governments are pre-funding their retiree health liabilities.

“Let’s work on facts,” Snyder said. “This broad brush, just do this or that, I don’t necessarily think is the best way to approach it.”

Forming the task force would provide an opportunity to “understand what everyone’s concerns are, so we can say at least we had a chance for people to be at the table to understand the challenges and then let’s see what needs to be done,” he said.

While no Michigan cities currently have a state emergency manager, he said, “you don’t want to take that for granted” and there should be an examination of retiree costs.

Well-funded systems could be left alone, Snyder said, while poorly funded ones would need to be addressed.

“Most are going to fall in the middle. ... Are there some steps you should be taking to make sure you move upward? It may take 20 or 30 years but you’re on a path to get there and avoid dropping into this bottom group,” he said.

After the bills were introduced two weeks ago, police and firefighters called the legislation an “unconscionable” attack on people who risk their lives protecting the public. Union officials and groups representing police and fire leaders said they had not been consulted by GOP legislators or the Snyder administration.