Public Employee Unions, Bond Vultures Circling Michigan Taxpayers

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Today the Michigan Senate Appropriations Retirement Subcommittee took testimony from a bond brokers’ lawyer on House Bill 4075, which would allow local governments to borrow to establish funds from which would be paid post-retirement health care benefits they’ve said over the years they would provide to retired government workers.

Note the careful phrasing: “Benefits they’ve said over the years they would pay.” The first “they” is current and past politicians, and the second “they” is future taxpayers.

Note two words not contained in that opening sentence: “liability” and “obligation.” Courts have ruled that unlike pensions, employers have no obligation to pay these retiree health care benefits.

Of course the government employees and their unions want everyone to think that this is a real obligation. They implicitly reveal the truth with another bill discussed in committee today, House Bill 4073. This would explicitly convert those politicians’ promises into real contractual obligations. Doing so would have future Michigan taxpayers choosing between pavement and police vs. gold-plated health bennies for age 50-something public retirees.

These bills easily passed the House – the Democratic majority there makes no bones about being in the tank for public employees. The fact the bills are getting a hearing in the GOP-controlled Senate suggests that Repubs may be just as misguided about where their loyalty properly lies – with taxpayers or with politically powerful government employees and their unions.

Here’s my guess about the outcome: The Senate will pass the bills after adding some eye-wash in the form of marginally more stringent financial standards limiting which local governments may burden future taxpayers with this new debt. The Senate will not mandate that locals put all new employees in defined contribution pension and post-retirement health bennies before they can issue these bonds. The bills are bad enough, but leaving this out would be fiscal malpractice of the worst sort.

With or without that prerequisite, passing these bills would be just one more tragic example of the destructive priorities of this dysfunctional legislature. Especially for Republicans, who have pretended to the public that they are more fiscally responsible.

Note that if the state, school and local governments just pulled the plug on all these health benefits, retirees would still be eligible for Medicaid at age 65. We’re not talking about stepping over the bodies of ailing seniors here, but over the swim-suited bodies of age-50 something public retirees catching the Florida rays while enjoying health benefits courtesy of Michigan taxpayers.

Oh, and the bond vultures? If the bills pass they will make millions brokering all these new public debt (bond) sales. Senators shouldn’t give these people the time of day, much less a respectful hearing.

Hey GOP senators – which side are you on? Taxpayers, or public employees and bond lawyers each with their big campaign contributiuon warchests.

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