Michigan Gov. Rick Snyder is expected to sign bipartisan legislation aimed at providing stability for municipal pension and health care plans for retirees.
The Senate passed the package unanimously early Thursday and the House passed it on a 107-3 vote.
“I sponsored and voted for this legislation to protect the retirement benefits of our firefighters, police and other municipal employees,” Rep. Gary Howell, one of the cosponsors of the package, said.
The initial package contained 16 bills that would create a five-step system to help municipalities pay their pension and health care obligations in full. Steps one through four set up reporting requirements, funding targets, funding plans, a waiver system, and a requirement for municipalities in poor fiscal shape to create a "Corrective Action Plan."
Step five would have created a Financial Management Team (FMT) that would have the authority to create a plan for municipalities to pay liabilities.
Democrats and some Republicans objected to the FMT provision, saying that it was essentially an emergency manager by another name. Emergency managers, who can take over a locality’s finances in a declared emergency, are a contentious issue in Michigan in the wake of botched handling of the Flint water crisis.
The final version of the bills were amended to remove the FMT provision.
The legislative package came in the wake of a report issued in July 2017 by a bipartisan task force charged with studying local pension and health care payments and making recommendations to address unfunded liabilities. Snyder created the Responsible Retirement Reform for Local Government task force in January 2017 to study unfunded liabilities in the state.
The task force’s report found that the state's municipalities have unfunded retiree liabilities of more than $17 billion: $10.13 billion for retiree health care benefits and $7.43 billion in pension liabilities. The report estimated that "for many Michigan cities, roughly 20 cents on the dollar goes to pay pension and OPEB [other post-employment benefit] costs.”