GOP Leaders Set Spending Without Snyder Amid Pension Impasse

May 30, 2017

Republican lawmakers could approve a state budget without the agreement of Gov. Rick Snyder for the first time in his tenure after they reached an impasse over making newly hired school employees ineligible for a pension in retirement.

Legislative leaders signed "target" spending levels over the weekend — a key step before the GOP-led House and Senate can start ironing out differences in a $55 billion plan beginning Tuesday. The last time such a deal was struck without the governor's involvement was 2009, when Democrat Jennifer Granholm was in office and the state faced budget deficits.

There is no such revenue shortfall this time.

Republicans' agreement would hold in reserve $475 million that Snyder proposed saving or spending. It would instead earmark the money for initial transition costs to make new school workers eligible for a 401(k) only and not a hybrid pension/401(k) plan in the Michigan Public School Employees Retirement System. The Republican governor and Democrats oppose the switch.

"Reforming MPSERS and finding a solution to the debt crisis crushing our local schools and teachers is critically important, and that is why the House and Senate are continuing to move the budget process forward with a focus on this issue," said Gideon D'Assandro, spokesman for House Speaker Tom Leonard.

Snyder spokesman Ari Adler said the governor still wants to work with the Legislature on the budget.

"Gov. Snyder remains committed to a responsible budget that is smartly balanced and serves Michiganders well now and into the future," he said.

Legislative economists estimated last week that closing the hybrid plan, which Snyder has said is working because is it better funded than a plan for more veteran teachers, would cost Michigan an average of $465 million more annually in the first five years.

The stalemate between Snyder and GOP legislators could delay enactment of the budget, which typically is wrapped up in early June — months before the October start date. The governor and legislative leaders plan to attend the Detroit Regional Chamber's annual policy conference on Mackinac Island this week.