Governor Snyder Pushes $350 Million for Detroit Pensioners

Governor Snyder, standing with Senate Majority Leader Richardville (R-Monroe) and House Speaker Jase Bolger (R-Marshall), called for a commitment of $350 million over the next twenty years in order to mitigate pension reductions for Detroit retirees.

The Governor was quick to add, however, that the State would only provide funds if there was a settlement that included public employee unions and retirees that are currently fighting the municipal bankruptcy. Additionally, Mr. Snyder said independent management would be needed for the City’s general retirement system for the State to commit funds. He indicated that may not be needed for the pension system that handles police officers and fire fighters.

Governor Snyder recommended that the funds come out of the 1998 national tobacco settlement. In the current fiscal year, the tobacco settlement provides $253.5 million to the State, with a great deal of those funds going to the 21^st Century Jobs Trust Fund. The state has already securitized about 24 percent of its settlement revenue; it agreed to take a lump sum payment in exchange for giving the rights to the revenue stream to bondholders.

Governor Snyder would not say whether he wants the board that oversees the general retirement system replaced, saying that would be part of the mediation process.

Mr. Bolger and Mr. Richardville have yet to decide which chamber will formally introduce legislation for the proposal.

Governor Snyder insisted that municipal bond holders would have no claim to these supplemental funds in the event that the legislation makes it through the House and Senate.

While state funding, in part, is intended to mitigate pension cuts, Governor Snyder made clear that the money will not be enough to keep city pensions at 100 percent. He expects the exact figure to be determined as part of the official plan of adjustment the city proposed to the U.S. Bankruptcy Court. The estimates of the unfunded liability in the pension system vary greatly, but the official estimate is $3.5 billion.

posted by PAA Online , Friday, January 24, 2014 11:01 AM
LINK DIRECTLY TO THIS ARTICLE

This Week's Newsletter

Past Newsletters