This week, the House and Senate introduced legislation making reforms to retiree benefits in local communities. Over the past month there has been increasing talk around the Capitol of making such changes in response to local governments who are facing unfunded liabilities. On Wednesday, police and firefighters, who receive local pensions and benefits, showed up in force on the Capitol lawn to rally in support of the Governor’s Responsible Retirement Reform Task Force report, which laid out several steps the state could take to aide local governments.
The legislature’s proposal would create a five-stage stress system for local governments, with additional reporting requirements and steps for local governments facing unfunded liabilities. It creates an early detection system to help local governments and the state identify potential funding problems. For those with a financial problem, the proposal creates a Local Retirement Stability Board with local government and labor representation. If the groups can’t reach an agreement on a plan that is approved by the stability board, the local government will have a three-person Financial Management Team. The team will consist of at least one resident and two local government experts with financial planning experience. The proposal includes a $1.5 million appropriation, thus making it referendum-proof. Legislators, the Governor, and labor representatives continue to negotiate on the final plan.
In the Senate, the legislation was referred to the Senate Michigan Competitiveness Committee and in the House, the package was referred to the House Michigan Competitiveness Committee.
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