Budget Watchdog: State Has Billions in Unbudgeted Retiree Costs

Former Gov. Jennifer Granholm told the MIRS news agency she was handing over a balanced state budget that even had a surplus.

But one watchdog accounting agency is saying Granholm is ignoring $50.1 billion the state owes to its workers, mostly for retiree pensions and health care.

Sheila Weinberg, CEO of The Institute for Truth in Accounting, said their analysis of Michigan's 2009 audited financial statement found the state in a "precarious financial position."

Truth in Accounting, an Illinois-based nonprofit organization that fact-checks government financial information, found that each taxpayer in Michigan would have to pay $16,400 to cover that $50.1 billion deficit.

"Instead of having to write the check now, they go ahead and promise the benefits, and those don't have to be paid until they are long out of office," Weinberg said. "Truthful accounting would include the health care and pension benefits that the employees are earning each year. … That cost is there, and it is real, and it should be included in the budget."

Included in that $50.1 billion deficit is an $8 billion pension shortfall and a $32 billion shortfall for retiree health care, Weinberg said.

James Hohman, fiscal policy analyst with the Mackinac Center for Public Policy, said the sheer size of the pension and retiree health care liability indicates the state has been "very generous."

"Michigan can reform these liabilities before having to make payments on them," Hohman said.

The Institute for Truth in Accounting has reviewed other states' budgets. Weinberg said the state with the highest burden on taxpayers was New Jersey at $47,000 per taxpayer, just short of three times as much as Michigan.