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GOP drops health care, pension change push amid protest

Jonathan Oosting, and Ian Thibodeau

Lansing — Michigan’s Republican-led Legislature will not vote this year on controversial plans to limit retiree health care benefits for local government employees or close the state’s teacher pension system to new hires.

As police and firefighters descended on the Capitol Tuesday morning in protest, House Speaker Kevin Cotter confirmed he would not push for a vote on the bulk of the retiree health care package during the “lame-duck” session.

Cotter, who will be forced out of office at the end of the year due to term limits, said the debate deserved more time but had already helped “shine the light” on unfunded liabilities that threaten local government budgets across the state.

“The problem is very real, and it’s not going to go away,” said Cotter, R-Mount Pleasant. “It’s only going to get worse.”

State Sen. Rick Jones, R-Grand Ledge, center, claps on the steps of the Capitol as hundreds of police officers and firefighters gather Tuesday to protest a House bill that would have restructured their retirement benefits.

With less than two weeks left on the legislative calendar, Senate Majority Leader Arlan Meekhof is also dropping his push to vote on bills that would move all new teachers into 401(k)-style retirement plans, a spokeswoman confirmed.

Meekhof, R-West Olive, delayed a planned vote last week after Gov. Rick Snyder’s administration raised alarms over “transition” costs associated with the proposal to end traditional and hybrid pension options for new teachers.

“Members of the caucus would like more time to review the policy as proposed, more time to review the numbers and to get a better understanding of the costs associated with a migration and the long-term savings opportunity,” Meekhof spokeswoman Amber McCann said.

She predicted legislators will continue to discuss teacher pension reform in the new two-year session that starts in January, “but it’s just not going to be tackled in lame-duck.”

Educators and public school groups, who argued the pension legislation would make the teaching profession less attractive to young people, celebrated news the package had stalled out.

“This proposal, if passed, would have resulted in layoffs, overcrowded classrooms and school closures, and could have even pushed schools to the brink of bankruptcy,” said Robert D. Livernois, Superintendent of Warren Consolidated Schools.

The House Committee on Local Government was scheduled to discuss the local government retiree health care proposal Tuesday morning, but 12 of the 13 bills were abruptly dropped from the schedule, effectively tabling the package for the year.

“I applaud the speaker for beginning this difficult conversation, but I think it’s more appropriate to tackle the issue in full in an upcoming term when all voices can be heard,” said Rep. Lee Chatfiled, R-Levering, who chairs the committee.

The legislation was designed to prohibit local governments from promising retiree health care coverage to new hires, instead giving them the option to contribute to a tax-deferred Health Savings Account employees could use on their own. It also would also force many current local government employees and retirees to pay for at least 20 percent of their own post-employment health care benefits.

Critics said the health care proposal could have been devastating for retirees living on fixed incomes, and its introduction prompted intense backlash from public safety personnel.

Firefighters gathered on the Capitol lawn Tuesday said it would have added another cut to the laundry list of concessions first responders have made in the last decade.

Mark Docherty, president of the Michigan Professional Fire Fighters Union, said he hopes legislators “take a more responsible” approach to unfunded health care liabilities next year.

“I’m glad they came to their senses,” he said.

Docherty, who represents roughly 5,000 firefighters in 130 Michigan communities, said the plan that stalled Tuesday would have hurt communities that already have cost-saving plans in place. Firefighter recruitment is already down, he said.

“I believe it is from all these attacks through the years,” Docherty said.

Kevin Kukla, 49, has been a firefighter in Harrison Township for 20 years. He and coworker Matt Czarnecki, 34, said this cutback would have affected firefighters and police officers most, because they typically retire sooner because of the toll the job takes on their bodies.

“When you’re already down to the bone, there’s nothing left,” Czarnecki said.

Kukla called Tuesday’s tabling a small victory.

“We want to get everyone at the table ... and have a conversation,” Kukla said.

The men warned that further cuts would continue to discourage people from becoming first responders.

“Why take the job with all that stress” Czarnecki said.

Cotter and others pushing the legislation said the state must address massive unfunded liabilities in order to help local governments avoid financial collapse or bankruptcy, which could lead to even steeper retiree cuts.

“Our mission is to make sure people get the benefits. That’s why we’re taking on this task,” said Rep. Dan Lauwers, R-Brockway. “If we continue to ignore the information and the situation that’s before us, it’s pretty likely that somebody’s going to get left without benefits.”

Lauwers sponsored a standalone bill that would increase reporting requirements for local governments to help the state understand the magnitude of the unfunded liabilities they face.

The proposal, which was the only measure considered and approved in committee on Tuesday, would require retirement systems to submit annual reports to the state Treasury, which would have to post data online. Local governments with retiree health care systems or pensions funded at less than 60 percent would have to document online steps it was taking to address the unfunded liabilities.

“We’re simply asking people to bring forward their information,” Lauwers said.

Democrats, who have acknowledged unfunded liabilities are an issue worth discussing, celebrated Cotter’s decision to drop the bulk of the retiree health care proposal for the year.

“It’s encouraging Republicans have come to their senses, at least for now, in backing away from hurting those who put their lives on the line every day to protect citizens,” said House Minority Leader Tim Greimel, D-Auburn Hills. “They put their lives on the line every day to protect us, the least we can do is make sure they have quality and affordable health care when they retire.”

joosting@detroitnews.com