GOP leaders still focused on pensions
LANSING (AP) — Unfazed Republican legislative leaders said Tuesday they remain committed to closing the pension system to new teachers and instead giving them a 401(k), after seeing revised tax revenue estimates that could complicate budget talks that are coinciding with the debate over changing the school employees’ retirement system.
The new figures are mixed.
The nonpartisan legislative fiscal agencies now estimate that collections for the $12.6 billion school aid account, Michigan’s largest, will be between $286 million and $364 million higher over this fiscal year and next than was projected in January. But the $10 billion general fund, the second-biggest account, will have between $377 million and $492 million less than expected over two years.
Gov. Rick Snyder’s administration and legislative economists will agree to consensus numbers today, with hopes of finalizing the next budget in early June — four months before the fiscal year begins.
The GOP-led House and Senate have passed spending plans that leave uncommitted hundreds of millions of general fund dollars — potentially to cut taxes, put more money into savings or spend upfront costs to transition newly-hired teachers away from a pension. Snyder, a Republican, has reservations about closing the hybrid pension/401(k) plan due to large upfront transition costs that would extend beyond just this budget cycle and has instead expressed interest in addressing municipalities’ retiree health care costs.
Amber McCann, spokeswoman for Senate Majority Leader Arlan Meekhof of West Olive, said the new figures are not a surprise and senators had set aside $542 million money to “accomplish some policy goals in conjunction with the budget but also to provide flexibility for us to make adjustments in light of the revenue-estimating conference.” Changing the Michigan Public School Employees Retirement System, she said, ultimately is more of a policy-driven concept.
“Talks continue,” Gideon D’Assandro, spokesman for House Speaker Tom Leonard of DeWitt, said of potential retiree changes or tax reductions. “We prepared ahead of time and we budgeted conservatively to give ourselves some flexibility.”
Combined education and general revenues will grow by more than 2 percent this fiscal year and about 3 percent next year, according to the House and Senate fiscal agencies. They attribute the change from the January estimates to weaker-than-expected income and business tax collections but stronger growth in sales tax revenue.
While having less in the general fund could affect majority Republicans’ plans, they could eye the extra education money to move new school employees to solely 401(k) plans.
Democrats said the revised revenue projections should give the GOP pause.
“I think it hopefully will burst the bubble of the desire to sort of gut the teacher retirement system. I think it was a bad idea before. It’s definitely a bad idea now,” said Senate Minority Leader Jim Ananich of Flint. Legislators should take the additional school dollars and boost per-pupil aid and reduce the funding gap between higher- and lower-funded districts, he said.