Legislature Compromises, Adopts Scaled-Back Local Retirement Overhaul

“This is an issue that’s only growing in terms of potential risks to retirees and to local government” said Gov. Snyder.

Michigan State Capitol building on a sunny day

Jake Neher/WDET

Gov. Rick Snyder and Republican leaders have backed down from a plan to give the state sweeping authority to intervene in local budgets.

The GOP’s plan would give the state the power to step in if a local government’s retirement plans don’t meet funding targets. The solutions could have included forcing budget cuts or selling assets.

Police and firefighter unions opposed the GOP plan because it might have allowed benefit rollbacks.

The plan adopted overnight requires the state Treasury to examine local retirement funds and identify ones that might not be able to meet their obligations. 

Snyder is a CPA/investor turned politician, and he’s had his eye for a while on making sure local retirement plans are better funded. These bills were not as far as he wanted to go, but the governor badly wanted something done before the Legislature leaves for its winter break.  

The governor said earlier in the day he’s willing to accept a compromise. 

“This is an issue that’s only growing in terms of potential risks to retirees and to local government,” said Snyder.

State House Speaker Tom Leonard (R-DeWitt) says there are big liabilities in some communities that are going to have to be dealt with.

“Certainly, at some point, we’re going to have to figure out what to do with those municipalities that are in the worst shape,” said Leonard.

State House Democratic Leader Sam Singh (D-East Lansing) released a statement after the vote:

“Tonight, I am proud House Democrats were able to protect retirement health care benefits for our state’s incredible police officers and firefighters. Previous plans that were being rushed through the process could have taken away health care benefits that our first responders were counting on. Instead, however, we were able to get House Republicans to agree to a set of recommendations put forth by the Responsible Retirement Reform for Local Government Task Force — a plan House Democrats had backed from the beginning. While this is a victory for the men and women who work tirelessly and make great sacrifices to keep us safe, it also marks the beginning of another important fight to ensure that local municipalities have the tools and financial resources they need to head off similar challenges in the future.”

The Legislature returns to Lansing next week for final votes that will send the bills to Snyder’s desk.