Cost of Retiree Benefits Weighing Down on Michigan

The Michigan Capitol is shown at twilight Thursday, Sept. 24, 2009, in Lansing, Mich. Lawmakers continue work on budget bills that deal with a $2.8 billion shortfall before an Oct. 1 deadline. (AP Photo/Al Goldis)
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The price tag for providing healthcare benefits to Michigan's public retirees is huge. According to MSU economist Eric Scorsone, it'll cost the state a total of $13 billion over the next 30 years.

"We got here because promises were made over many decades to retired people who were working but there was no accounting for it until 2005," said Scorsone.

Thursday, Scorsone presented his findings to the House Committee on Financial Liability Reform. He says Detroit is in the worst shape, accounting for over $6 billion of the state's unfunded legacy costs. However, other urban cities like Lansing, Grand Rapids and Flint face similar problems. Smaller Mid-Michigan towns like Dewitt and Grand Ledge are also unspared.

"With the new Affordable Care Act and the new state exchange, there may be some options there to alleviate some of these challenges, other issues would be reducing benefit to retirees or providing the funding, there are really only 3 main options you have," Scorsone said.

Rep. Earl Poleski, R-Jackson, says making changes won't be easy, but doing nothing is not an option.

"In the long term our state will suffer, taxpayers will have to pay more, retirees will find themselves with greater uncertainty and that just doesn't work for everybody," said Rep. Poleski.

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