After months of discussion and public debate about plans that were foggy until last week, Gov. Rick Snyder has laid out in more detail his proposals for reforming Michigan, initiatives which would overhaul the statutory revenue sharing program as well as mandating a 20-percent health care contribution by new public employees and placing those new hires on a defined contribution plan capping annual employer — read: taxpayer — contributions at 10 percent of that employee’s base salary.
Snyder, an Ann Arbor Republican, also wants jurisdictions to be able to consolidate; reform of Public Act 312, which deals with binding arbitration; and the prohibition of minimum staffing requirements as mandated by some city charters.
“Local officials deserve credit for continually finding ways to make effective use of their limited resources,” Snyder stated in a press release. “However, antiquated laws often discourage them from taking broader steps such as consolidating or sharing services with neighboring communities. It is time that we view both challenges and solutions in a regional context rather than confining them to township, city and county borders.”
One of Snyder’s proposals would eliminate the state’s statutory revenue sharing program in lieu of a new Economic Viability Incentive Program (EVIP), which in the first year would redline funding for communities expecting to receive less than $6,000 in statutory revenue sharing. But communities that would continue to receive funding would have to implement certain reforms such as “embracing accountability and transparency,” developing plans to consolidate services resulting in taxpayer savings, and take serious steps toward “addressing employee compensation.”
Those serious steps would include requiring — for new, modified or extended contracts — new hires to be placed on a defined contribution or hybrid retirement plan with employer contributions being no more than 10 percent, using a 1.5 percent multiplier when applicable, implementing controls to avoid pension spiking, and requiring a 20-percent premium contribution from employees.
One-third of the new EVIP funding would be awarded for each category of best practices that the community meets. Units of government would have to meet the three criteria by Jan. 1, 2012.
Snyder is also calling for $5 million of the $200 million in EVIP start-up money to cover some of the cost incurred during a municipal merger process, something the governor says will save taxpayers money in the long run.
He is also calling for state statute to allow consolidation of jurisdictions. He stressed that such consolidations into a metropolitan authority — a proposal that has been bandied about for Grand Rapids’ Kent County, according to Michigan Townships Association legislative liaison David Bertram — should not be mandated, but instead be made at the local level.
Constitutional revenue sharing, which is based on community population and sales taxes, is projected to come in at $659 million in the Fiscal Year (FY) 2011-12 state budget, a 4-percent hike.
“We applaud the governor’s continued support of Michigan communities and his desire to give our cities, villages and urban townships the tools they need to share services and operate as efficiently as possible,” said Michigan Municipal League CEO and Executive Director Dan Gilmartin in a press release.
Bertram said the organization is “generally supportive” of the reform measures Snyder has put forth.
“We think there are some positive things he’s recommending,” Bertram said. “We have currently 40 townships out of 1,240 that are getting statutory revenue sharing. Once upon a time, it was everybody. It’s gone from $90 million to $5 million in statutory revenue sharing. Out of those 40 (townships), only a handful get a sizable amount.”
Snyder is also floating reforms to the state’s binding arbitration statute, including requiring that a community’s ability to pay should be critical in an arbitrator’s decision; that internal salary and benefit comparisons be a key factor; that both sides submit a last best offer; and that the binding arbitration process last no more than 90 days.