Pension reform subject of MI budget discussions

A file photo of Michigan's Capitol Building in Lansing on May 25, 2016.

LANSING, Mich. (WOOD) — The budget rolled out by the Trump administration this week has garnered a lot of attention, but the one being worked on in Lansing may have a more direct impact on many in Michigan.

The difference in how money is spent in this fiscal year compared to next year will likely not be great. Next year’s budget may be about $2 billion more, but the same basic breakdown on spending is expected.

The holdup isn’t really how to spend the money but what to do about another issue concerning retirement — that’s where the House, Senate and Gov. Rick Snyder have some differences.

“The budget process is progressing. We’re in a pretty good spot right now. There are still some pretty high-level discussions that need to be made,” said Sen. Dave Hildenbrand, R-Lowell Township.

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Hildenbrand, chair of the Senate Appropriations Committee, thinks the budget can be done early next month. Then the budget would be done nearly four months ahead of time, which the Michigan Legislature has done for the past six years.

But this year, Hildenbrand says the governor and others have to talk.

“There are some kind of high-level decision-making that has to happen before all the other pieces of the puzzle, the budget puzzle, can be worked out,” he told 24 Hour News 8.

Perhaps the biggest stumbling block — changing the way retirement benefits are paid going forward for new state hires. The appropriations chairman says that is an open and ongoing discussion.

“No question the state has billions of dollars of unfunded liabilities. So long term, it makes sense to address those so the state budget is in better shape long term,” Hildenbrand said. “We’re looking at how to address those un-funded liabilities when it comes to retirement, health care costs for retirees of the state and public schools.”

The basic problem is the House and Senate want to move new employees to a 401(k) retirement plan with no pension component. The governor does not.

The nonpartisan House Fiscal Agency estimates the move would cost $410 million in the first year, according to an Associated Press report.

So, will the legislature put a budget on the governor’s desk and ask him to sign and work it out later? Or might they put the budget off until later in the summer?

Those are two of the questions that will be the topic of conversation at the Detroit Regional Chamber of Commerce Mackinac Policy Conference next week.

Political Reporter Rick Albin will be on Mackinac Island starting Tuesday. It’s likely to be a lively meeting and 24 Hour News 8 will report on all developments from the conference.