Bills to Address Unfunded Municipal Pension/Benefit Liability Introduced in State Legislature; Chamber Supports Aggressive Action

December 4, 2017

A 16-bill package aimed at reigning in massive municipal unfunded pension and benefit liabilities was introduced in the both the State House and Senate last week. The Michigan Chamber supports this effort to make sure local governments do everything they can to shore up their liabilities. Failure to handle these massive unfunded liabilities held by local governments could unquestionably fall on Michigan job providers if not dealt with aggressively.

The proposal sets up a four-phase process that aims to enhance data collection from locals governments to better understand the issue, create a process to evaluate this data to know where the problems are, and finally force local units to offer solutions to deal with their financial problems. If no solutions are offered and/or these solutions are not acted on, the local unit will eventually end up in an emergency management situation where certain reforms will be forcibly imposed.

Currently, local units of government have $7.46 billion in unfunded pension liabilities and $10.13 billion in unfunded health care liabilities lurking in their finances. These liabilities, if not dealt with, could fall on the backs of individuals and businesses across Michigan. The need for thoughtful reform as opposed to simply raising taxes is very pressing.

For more information on local government’s unfunded liabilities and proposed initiatives to deal with them please contact Dan Papineau, at dpapineau@michamber.com