“If the fiscal stress is so great, why keep doling out uncompetitive benefits?” Hohman asks.
Local governments have been saying for more than a decade that the state doesn’t fund them enough, Hohman says. However, he suggests that the local governments are operating as if their fiscal complaints are exaggerated.
“For example, providing post-retirement health care benefits to employees is an expense that should be the first to go if there is a real financial problem,” Hohman wrote. “Many local governments in Michigan pay for retired employees’ health insurance costs, a type of benefit that is rare in the private sector. Unlike pension promises, these other post-employment benefits, or OPEB, may possibly be trimmed or even rescinded later, though it may be subject to collective bargaining where it has been part of a union contract. For example, state retirees recently experienced an 11 percent cut in this benefit.”
Read the complete post: “Local governments cry poor but act rich.”
Hohman is assistant director of fiscal policy at the Mackinac Center for Public Policy. He holds a degree in economics from Northwood University in Midland.
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