State Rep. Jim Tedder of Clarkston joined the state House today in voting to protect the retirement benefits of police, firefighters and other local government employees.
The legislation approved by an overwhelming bipartisan majority will help identify local governments most at risk of bankruptcy or severe financial hardship due to underfunded retirement plans. The legislation is designed to help local governments avoid financial crisis, so they can continue to pay for promised retiree benefits and public services.
“No one wants to take benefits away from our police and fire department personnel. We want to do all we can to preserve the benefits they’ve worked so hard for,” Tedder said. “First responders put their lives on the line for us every day. With this vote today, we’re taking a significant step toward protecting the benefits of those who protect us all across Michigan.”
Michigan’s local government employee retirement systems have unfunded liabilities fast approaching $20 billion. The legislation approved by the House seeks to help communities improve their plans’ finances, mirroring recommendations from a task force assembled by Gov. Rick Snyder earlier this year.
The legislation calls for communities to make a minimum level of payments related to retirement systems for new hires. It creates a reporting system with uniform financial and accounting standards for local government retirement plans. An early detection system will help identify potential funding problems so local governments act quickly to deal with them. Communities will be vetted through a state treasurer’s fiscal impact evaluation and retirement systems will be flagged as underfunded when municipalities aren’t meeting set criteria to alleviate their debts.
Tedder spent hours discussing the issue with local government, police and fire department representatives.
“Doing nothing simply is not an option,” Tedder said. “That would put retirement benefits for local government employees at greater risk. This plan gets us started on the right path by giving communities the mechanisms needed to improve their own financial situations.”
The legislation advances to the Senate.