News Story

Whitmer pension grants are a $553M bailout for governments

Michigan municipalities that made promises they can’t keep get half-billion dollar bailout

The state of Michigan has extended a half-billion dollar bailout to local government pension funds in the 2024 budget. That’s not how Gov. Gretchen Whitmer describes it, depicting the bailout as putting money “back into Michigan seniors’ pockets.”

But that’s not how the governor’s plan works.

“Michiganders work hard and they deserve to retire with dignity,” Whitmer tweeted of the Protection MI Pension grants on Sept. 20, complete with an image of characters from the TV show “Golden Girls” jumping with glee. “Today, we're putting $553 MILLION back into Michigan seniors’ pockets through Protecting MI Pension grants in 123 communities across the state.”

“Communities,” in this case, means units of government.

Even when public pension plans use accurate actuarial assumptions, they are often underfunded, which many plans in Michigan are.

James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, described how underfunding works in a 2016 blog post that drew on a movie called “The Blob.”

“It’s where this tiny piece of goo keeps growing, gobbling up everyone in sight. The horror reaches a climax as the blob becomes so large that nothing can stop it. A young Steve McQueen eventually figures out that it doesn’t like the cold, so the town freezes it and transports it to the Arctic,” Hohman wrote.

Hohman then turned to pensions. “It is state policy to prevent pension debts, per article IX, Sec. 24 of the state constitution,” he wrote.

Whitmer’s Protecting MI Pension plan shores up underfunded pension plans of various governments in Michigan. Contrary to the governor’s tweet, the plan does not add any new money to seniors’ pockets. It does, though, benefit various local governments, such as Flint.

Flint has had an underfunded pension system for years. Its pension system was only 29% funded as of June 2022. It has $391.6 million in unfunded obligations.

Michigan Capitol Confidential reported in 2021 that Flint had 29 cents for each dollar needed to cover its pension promises, extended to employees by current and former officials. Flint was $388 million short of the amount it should have had to cover the pension promises it has made to its employees.

That year, Flint’s total revenue was $100 million.

The city will receive $170 million from state taxpayers under Whitmer’s plan.

Charlotte had 57.7% of its pension liabilities funded in June 2022. Its plan will receive $1.2 million from state taxpayers. This will improve its pension funds to 60% of what they should be.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

UAW strike expands nationwide at GM, Stellantis facilities, as Fain invites Biden to picket line

Ford and UAW have made progress, union says, and strike will not expand at Dearborn automaker

At noon Friday, the UAW strike expanded nationwide, as union president Shawn Fain called on workers at 38 parts distribution facilities owned by General Motors and Stellantis to stop working. And he asked President Joe Biden, a Democrat, to join workers on the picket line.

In a video update posted on X, Fain, wearing a black, white and gray camouflage shirt, said the union had made “real progress” with Ford Motor Co. So far the two sides have agreed to reinstitute the cost-of-living allowances that went away in 2009 and eliminate wage tiers, by which recently hired employees are paid less than those who have been on the job for years.

“Many people said this couldn’t be done,” Fain said of reinstating the cost-of-living pay.

And in a first-in-its-history concession, Ford has agreed to allow workers to strike in protest when plants they don’t work at are closed, Fain said.

Notable for its omission as a concession sought or granted: The 32-hour work week.

“Ford seems serious about making a deal,” Fain said, and it was exempt from further escalation. One Ford facility, Michigan Assembly in Wayne, went on strike last Friday. Fain said workers will remain on strike until a deal is reached.

GM and Stellantis, Fain said, are a different story.

See Fain’s video for yourself here:

As a result, Fain said, “we will shut down parts distribution until those companies come to their senses and come to the table with a serious offer.”

Nearly 40 facilities are affected.

“This expansion will also take our fight nationwide,” Fain said. “We will be everywhere from California to Massachusetts, from Oregon to Florida.”

Fain said that targeting only select facilities at a company for a strike gives the union flexibility. This is the first time the union has been on strike against the entire Big Three at once. A stand-up strike keeps the union from paying $500-per-week strike pay to 150,000 members at once, which could only last about three months.

Fain invites Biden and others who support the UAW to show their faces at a picket line in solidarity with strikers.

We invite and encourage everyone who supports our cause to join us on the picket line from our friends and families all the way up to the president of the United States,” Fain said. “We invite you to join us in our fight. The way you can help is to build our movement and show the companies that the public stands with us and stands with our elected national negotiators.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.