The Detroit News. August 9, 2017
State smart to target retiree benefits
Michigan is making headway in its government pension reforms, and retiree benefits at the local level are up next. Gov. Rick Snyder says this is a priority for him in his last year and a half in office, and local leaders should get on board.
If they don’t, the Legislature should intervene with stricter pension and benefit parameters.
Snyder formed a task force on local government retirement reform early this year and the group released its recommendations last month.
According to the task force, the state should require municipalities to prefund new hires’ retiree medical costs and help local governments facing substantial underfunding.
Such action would help avoid dumping today’s retiree costs on future taxpayers.
That is what’s happening now, and it is putting the state in a fragile financial position. A new report from the Mercatus Center estimates the state’s unfunded pension obligations total $147 billion. And it ranked Michigan 36th for its fiscal health, placing it below average among the states.
Economists factor return-on-investments less than state actuaries because the liabilities haven’t been paid out yet and it’s unclear how they’ll perform, says Olivia Gonzalez, one of the co-authors of the Mercatus report.
Economic optimism combined with a lack of preparation for volatile economic circumstances also explains how these municipal unfunded liabilities grew.
Now that the Legislature made major changes to the state’s teacher pension system in June, municipal governments are the last outpost of traditional defined-benefit pension plans. Of Michigan’s roughly 2,000 local governments, more than 800 offer defined benefit pension plans or health care benefits, or both, says John Walsh, the director of strategic policy for Snyder.
Pension plans are underfunded, but the gap is worse for other postemployment benefits - primarily retiree health care plans.
“At some point, either health care benefits are in peril, or, the services delivered by a community are reduced,” Walsh said. “Neither of those things are a good thing.”
Those negotiating pension plans did not foresee the rising costs of health care, diminishing returns, increased longevity and aging baby boomers leveling the ratio between workers and retirees, explains Walsh.
If these gaps increase, municipalities will have to raise property taxes to foot the bill. Staggering unfunded liabilities in Illinois, for example, led to higher property taxes and a drain in residents.
“If you disrespect your tax base, they will leave,” says Ted Dabrowski, spokesman for the Illinois Policy Institute.
That’s the last thing Michigan needs.
James Hohman, the director of fiscal policy at Mackinac Center for Public Policy, says promising benefits without saving for them along the way is “financial malpractice.”
Health care benefits deserve particular attention because, as Hohman says, local governments promise benefits but do not prioritize them in the budget. As a result, only about 10-20 percent is tucked away for retirees from municipal jobs in the police or fire departments.
The state task force couldn’t agree on benefit cuts or degrees of intervention, but it did agree on these recommendations for municipal governments: better actuarial reporting; a “fiscal stress test” that identifies retirement funding problems; and the creation of an oversight Municipal Stability Board.
Walsh says the level of intervention would depend on the fiscal instability. If communities score well on the stress test - meaning they recognize financial instability and are implementing measures to reverse that - the state wouldn’t get involved. But communities that don’t act quickly enough could face intervention.
Placing new hires in 401(k)-style plans is a step toward fiscal responsibility, and struggling local governments that haven’t already should make that transition.
This next round of pension reform could stabilize municipalities while preserving security for retirees. The state should act on the task force’s recommendations and avoid a more serious crisis in the future.
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Lansing State Journal. August 10, 2017
Ingham county treasurer’s office errors and weaknesses are costing us money
For the fourth consecutive year, the office of Ingham County Treasurer has failed to address concerns raised in annual audits.
The year, the accounting errors and poor procedures in the Treasurer’s Office caused a 60% increase in the county’s bill from its auditors.
Auditors have detailed “material weaknesses” in the Treasurer’s operations for four years - and that’s four years too many.
The time for leniency is long past.
Ingham County commissioners are right to call out Treasurer Eric Schertzing and his office. As Commissioner Robin Naeyaert said at a recent meeting: “It’s you that are the face of county dollars. It’s your job to oversee that and oversee it efficiently.”
The LSJ reported on July 25 that “Serious and persistent discrepancies in financial statements from the Ingham County Treasurer’s Office and the county land bank will cost the county an additional $51,300 in auditing fees.”
Lax oversight, allowing poor procedures to go unchecked, running the risk of errors in financial records - all these things are unacceptable in these times of tight budgets.
Finding similar problems four years running is outrageous. Four years ought to have been ample time to retrain staff and eliminate errors.
“There’s frustration to go around on all of these issues,” Schertzing said.
No one should be more frustrated than taxpayers. County services and programs shouldn’t have to, and can’t afford to wait for the treasurer to get ducks in a row.
Schertzing must clean this up now. Commissioners have asked for a listing of adjustments that were required in the most recent audit so they can understand the extent of the problem.
This should be followed through on so commissioners can help hold Schertzing accountable.
Schertzing has been country treasurer since 2001 and was re-elected to another four-year term in 2016.
That gives him three more years to fix this before finding himself back on the ballot.
This year the county is expected to have a tax proposal on the ballot.
Taxpayers and voters take notice: Treasurer’s Office operations are costing you money.
Monitor the performance of your elected officials - especially the county treasurer.
Be informed voters now and in the future.
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Times Herald (Port Huron). August 9, 2017
Voters said yes; officials must live up to their end
Tuesday’s Port Huron vote was a big victory for math.
Certainly, it was also a great triumph for everyone who lives and works in the city and uses its parks. We suspect several hundred of them will celebrate the passage of the two tax increases Thursday evening at Keifer Park. Beach Party Boys & Jersey Seasons headline Rockin’ the Rivers this week beginning at 6 p.m.
If anyone doubts Port Huron loves its recreation department, they should stop by the free concert at Merchant and Bard streets and take note of the hundreds of people who attend every Thursday in August. And if any doubts linger, look at Tuesday’s election results. The 1 mill parks and recreation tax passed with more than 56 percent of the vote.
Voters may like the police and fire departments a little more. Voters approved that 3 mill tax increase by a remarkable 23 percent margin. It passed in every city precinct; from the north end to the south side, it was not even close.
But as much as voters value and appreciate the departments they approved new funding for Tuesday, the vote was about something more than that.
It proved that voters believe the irrefutable truth about the city’s finances. It showed that voters believe City Manager James Freed’s calculations of Port Huron’s current financial position and the dire straits it faces without relief from its unfunded pension liabilities. And it demonstrates voter trust and confidence that the city administration is taking affirmative steps to protect them and their city’s future.
We hope the election results prove the same thing to those city council members who persist in believing there is magic in the pluses and minuses of balancing the city budget and meeting its liabilities.
Voters believe the unfunded liability pressure is real. City council members must acknowledge the same.
Voters did the math and decided to pay for services they value. City council members must make the same hard decisions. “I know it’s in there somewhere” is no way to draft a budget.
Voters, taxpayers took a close, hard look at reality and did what they needed to do. Lansing lawmakers and officials and Port Huron City Council should learn from their leadership.
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Petoskey News-Review. August 11, 2017
Give tiny homes a little policy consideration
Tiny homes represent a sizable break from residential construction trends seen in the United States during the past few decades.
There’s no universal set of size measurements that would define a home as “tiny,” but some see the category including dwellings of up to 400 or 500 square feet. By comparison, the U.S. Census Bureau notes that the average U.S. home size recently has stood at about 2,600 square feet - about half again as much as the average residential footprint measured in the 1980s.
The tiny home movement has drawn people interested in downsized living spaces that offer efficiency. Sometimes, buyers desire a residence with mobility as well, opting for models on wheels.
“Building it on a trailer provides a lot of flexibility in terms of where they want to live, and most in the tiny house movement … love to travel anyways, so it goes well with (the lifestyles in which they’re rooted),” Great Lakes Tiny Homes owner Aaron Kipfmiller said in a recent News-Review story about obstacles facing tiny homesteaders.
Kipfmiller, whose company in mid-Michigan builds custom tiny homes on wheels, also serves in state and national leadership positions with the American Tiny House Association, which promotes the small dwellings as a viable, formally acceptable residential option.
Whether tiny homes are fixed or trailer-mounted, buyers can run afoul of land-use regulations in many U.S. locales. While there may be legitimate cases for restricting their placement in some circumstances, we’d encourage local-level policymakers to consider the advantages some tiny homesteaders see in the dwelling category and explore workable options for accommodating them.
Often, the small dwellings fall short of the minimum square footage required for a permanent dwelling. Locally, for example, Emmet County requires a footprint of at least 720 square feet for homes in the 12 townships covered by its zoning. Little Traverse Township, one of several communities within Emmet County which opted to set their own zoning rules, specifies a 1,000-square-foot minimum.
Parking a wheeled tiny home, akin in some ways to a recreational vehicle, for an extended period can pose its own set of conflicts with local codes. Time limits may be in place for how long an RV can sit occupied on a property, rather than simply being stored there.
A tiny footprint may not be an attribute of everyone’s dream home. Some might value room to stretch or store belongings. The compact residences might not visually complement every other type of housing stock situated nearby - and protection of property values is an oft-cited reason for zoning policies’ existence.
But as with many property rights matters, we see something of a balancing act when it comes to tiny home placement.
Those who opt for the petite dwellings may seek a spot of their own where they can live with a modest environmental footprint. Financial sustainability might be a drawing card for others to live in tiny hones, for which pricing is commonly reported to be in the mid-five figures. The option might appeal to young adults seeking a path to home ownership without overwhelming debt, or retirees looking for a downsized option that’s manageable on a fixed income. While tiny homes may be modest in many regards, some examples show high levels of attention to architectural detail.
It’s common practice for local officials to revisit their zoning rules every years to see if conditions warrant updates. With the growing interest in downsized domiciles during the past decade - not to mention the housing affordability puzzles facing many locales, including our corner of Northern Michigan - we’d urge these policymakers to see if viable, harmonious solutions might exist for accomodating these homes within their territory.
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