On Tuesday, the Senate Finance Committee passed
unanimously SB 368, which seeks to expand upon pension tax exemptions for public safety
retirees not receiving Social Security benefits. The Governor signed an earlier
state exemption back in 2011, however it was granted only to public safety
officials that were born between 1946 and 1952. SB 368 would to expand this to
include individuals born after 1952.
Don Taylor, president of the Retired Detroit Police
and Fire Fighters Association, testified that this age group left out of the
exemption has struggled, especially with Detroit’s bankruptcy. Mr. Taylor
stated that individuals saw an increase in their pension tax as well as a
reduction in their pension benefits, and a 90 percent loss on their health care
coverage.
Senator Marty Knollenberg (R-Troy) had reservations
about the age of the affected, stating that the average age was younger than
the age of most retirees. Mr. Knollenberg questioned whether or not these
individuals could work, and if the taxpayers were footing their retirement
costs.
In response, Senator Ken Horn (R-Frankenmuth) asked
the committee to consider the sacrifices these public safety officials had made
in their career and the situations they are in now.
A Senate Fiscal Agency analysis noted that the bill is
retroactive, that the General Fund and School Aid Fund revenue would decrease,
but the number depends on the amount of participants and their specific
finances. The analysis also reported the impact for the 2015-2016 budget would
be about three times the ordinary annual impact of the bill and that the impact
will decrease as the years continue.