Republican lawmakers are colliding head-on with Michigan's most powerful public-sector unions after abruptly introducing bills during the lame-duck Michigan Legislature session aimed at curbing billions of dollars in unfunded post-retirement health care promised to police officers, firefighters and other local government workers.
The legislation, which opponents fear is on a fast track for passage, would end post-retirement health care for new local government workers and generally force existing workers and retirees to pay 20% of their post-retirement health care costs.
Michigan's police and firefighter unions are powerful enough that GOP lawmakers opted to exempt them when they and Gov. Rick Snyder rammed through right-to-work legislation that enraged other Michigan unions late in 2012.
Union strength, in general, has been on the wane in Michigan, widely seen as the birthplace of the modern labor movement. But police officers, firefighters and other first responders, who risk their lives each work day, maintain strong public support.
Firefighters, who suffer a 62% cancer rate, incur frequent injuries that take a toll, and deal with post-traumatic stress disorder, "will now be denied an opportunity whatsoever to secure their health in retirement," Michigan Professional Fire Fighters Union President Mark Docherty told the House Local Government Committee Thursday.
Other speakers highlighted the fact the committee took up the 13-bill package on a day when many police officers could not attend the hearing at the Capitol because they were at funeral services for Wayne State University Police Officer Collin Rose, recently shot to death in the line of duty in Detroit.
But as lawmakers seek to address an estimated $11 billion in unfunded post-retirement health care liabilities at the local government level, exempting police officers and firefighters, who tend to retire earliest and make up a significant share of the projected shortfall, is not seen as a viable option.
Though costs for workers and retirees will increase, "our ultimate goal is to ensure that our police and fire have health care and have the promises that were made to them," said Rep. Lee Chatfield, R-Levering, the committee chairman, who promised more hearings next week after listening to about three hours of testimony Thursday.
The Police Officers Association of Michigan is planning a Tuesday morning rally at the Capitol in Lansing.
Though public unions are united in their opposition, three key local government groups — the Michigan Municipal League, the Michigan Association of Counties, and the Michigan Townships Association — are broadly supportive of the legislation.
The package of bills would:
- Eliminate retiree health care benefits for local government employees hired on or after May 1, 2017, and allow local governments to replace the benefit with a contribution into a health savings account, capped at 2% of an employee's pay.
- Cap a local government's contribution for retirement health benefits for existing employees and retirees at 80% of the annual benefit cost, provided the retirement system's liability for retiree health benefits is less than 80% funded at the time of the legislation, or later falls below 80%.
- Make retiree health care a prohibited subject of bargaining under the Public Employment Relations Act.
- Protect post-retirement health benefits that are contractually vested — meaning existing collective bargaining agreements that expressly promise specific benefits for a specific period of time.
Though such cuts are unpleasant, something must be done and "consequently, we're supportive of the bills," said Tony Minghine, the Michigan Municipal League's chief operating officer and associate executive director.
House Speaker Kevin Cotter, R-Mt. Pleasant, told the committee Thursday "the current system is not sustainable," and "unless we act, many local governments will go bankrupt," hurting employees and retirees, and disrupting services.
"This is not about what benefits we would like people to have. It's about recognizing a very real problem and fixing that problem before it spirals out of control," Cotter said.
Rep. Jeremy Moss, D-Southfield, said he agrees the issue is important, but "we're going to have 90 minutes to talk about bills that will impact a lot of folks in this state."
Moss said he sees a link between the $11 billion in unfunded retiree health care benefits and what he said is $7 billion in state cuts to municipal revenue sharing over the last several years.
Moss asked Cotter: "Do you feel that this important issue that we're tackling deserves more deliberative thought than we can give it in the last remaining days of our legislative schedule?
Cotter replied that he has no firm time line in mind.
However, "we do a greater disservice if we delay for the sake of delaying," he said.
Officials said that although many local governments have taken steps to address the looming crisis, the problem is generally getting worse because of spiraling health care costs and overly optimistic expected returns on municipal investments. Also, workers are retiring earlier and living longer.
Eric Scorsone, Michigan deputy treasurer, testified that attempts to fund post-retirement health care are already consuming $480 million a year from local government budgets, but that's only a little more than half of the $800 million a year that should be paid to meet obligations.
The unfunded bill amounts to about $8 billion for cities, villages and townships and $3 billion for counties, Scorsone said.
Deena Bosworth, director of governmental affairs for the Michigan Association of Counties, told the committee her group normally favors local control, but it supports the legislation because it addresses two issues counties can't control: binding arbitration, which can award generous health care provisions to certain employees; and legal challenges to county efforts to reduce post-retirement health care costs, she said.
Rep. John Chirkun, D-Roseville, who served 29 years with the Wayne County Sheriff's Department, told the committee that for workers in law enforcement, "Your wife doesn't know if you're coming home at the end of your shift," but "You're now talking about changing the state of a health care system when someone is doing their job every day to protect you."
Chatfield's response: "What happens to those police and fire (workers) if their municipalities go bankrupt?"