Legislation requires state debt report during budget process
LANSING, Mich. — The Michigan Senate has approved Sen. John Proos’ legislation to require that the state’s unfunded liabilities be included during the budget process, starting with the governor’s budget plan.
“The latest numbers on Michigan’s unfunded liabilities are roughly equal to the entire state budget,” said Proos, R-St. Joseph. “At nearly $53 billion, these legacy costs are unsustainable and are already affecting our schools and all levels of state government. This reform would ensure we shine the light on our liabilities and the state’s overall financial situation when lawmakers are making critical budget decisions.”
Proos said that unfunded accrued liability (UAL), also known as legacy costs, is the difference between the retirement benefits promised to or earned by public employees and the amount of funds available to provide them.
Senate Bill 292 would require that the governor’s budget recommendation include the current UAL for retiree health care and pensions.
“We have accomplished a great deal to reduce our long-term debts — investing up to $1 billion annually to prefund our liabilities and put Michigan on pace to eliminate these debts within two decades,” Proos said. “It is vital to continue this prefunding plan in the future to protect residents’ hard-earned pensions as well as the fiscal health of our state, especially in the era of term limits.”
SB 292 would put into Michigan law the current practice of UAL information in the governor’s budget recommendation to ensure it is followed by future governors.
“Like local small businesses, policymakers need to understand the state’s debt situation and have a plan to eliminate it,” Proos said. “It is not only common sense, it’s the only way to protect the thousands of people who currently rely on the state’s retirement systems and ensure that our children and grandchildren are not stuck paying off a multi-billion-dollar bill.”
Proos’ bill has been sent to the House of Representatives for consideration.
Editor’s note: Audio comments by Proos are available on the senator’s website at www.SenatorJohnProos.com. Click on “Audio” under the Media Center tab.