Legislation requiring state debt report during budget process goes to governor
LANSING, Mich. — The Michigan Senate has sent Gov. Rick Snyder legislation sponsored by Sen. John Proos to require that the state’s unfunded liabilities be included during the budget process, starting with the governor’s budget plan.
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.
“It is hard to understand the size of Michigan’s unfunded liabilities, which are currently estimated to be roughly equal to the entire state budget,” said Proos, R-St. Joseph. “At more than $50 billion, Michigan’s legacy costs are unsustainable and are already affecting our schools and all levels of state government.
“I look forward to seeing the governor sign this reform, ensuring that we shine the light every year on our liabilities and the state’s overall financial situation when lawmakers are making critical budget decisions.”
Senate Bill 292 would require that the governor’s budget recommendation include the current UAL for retiree health care and pensions.
“During my time in the Senate, we have 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. “This is about ensuring future leaders continue this prefunding to protect residents’ hard-earned pensions as well as the fiscal health of our state.”
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.
“It is important that policymakers have access to the information needed to fully understand the state’s debt situation and how to eliminate it,” Proos said. “Rather than kicking the can down the road and asking future generations to pay our debt, let’s protect our children and the thousands of people who rely on the state’s retirement systems.”
Editor’s note: Audio comments by Proos will be available later on the senator’s website at www.SenatorJohnProos.com. Click on “Audio” under the Media Center tab.