Sarah Cwiek/Michigan Radio

Next week Kevyn Orr will be meeting with creditors to start negotiations in attempts to keep the city from going bankrupt. According to Matt Helms of the Detroit Free Press , the negotiations will includes over 150 representatives from the city’s major creditors including national banks who hold the city’s bonds, insurers, union representatives, and pensioners.

Lester Graham / Michigan Radio

This week in review Rina Miller and Jack Lessenberry discuss the possibility of repealing a tax on pensions, how Michigan's home foreclosure rate is no longer the worst, and how the international trade crossing has a presidential permit to move forward.

Faberge eggs, Rodin sculptures, and a mountainside resort in Costa Rica. And now bribe money from a heroin dealer. The plot behind the theft of Detroit pension fund money thickens. And now that Kastenes has surrendered, more answers are likely to come.

Michigan’s 250,000 teachers and state school employees face a deadline of October 26th to choose a new retirement plan. But some groups are asking the State Supreme Court to extend that deadline. State legislators passed a law changing the pension system in August. Ellen Hoekstra represents the Michigan Federation of Teachers. "We’re advising people to get as much information as they can and at least fix in their own mind what option they think would be best for themselves and their own family – prior to the 26th – in case that ends up being the deadline," said Hoekstra. School employees will have four options. One would require them to pay more than they pay now, to get the same pension. Another option would allow people to pay the same amount they pay now, but get a smaller pension when they retire.

State employees call court ruling a 'victory'

Sep 28, 2012

Thousands of state employees are applauding a judge’s ruling that they shouldn't be forced to pay for their pension benefits. An Ingham County Circuit Court judge said today that a rule requiring state employees cough up four-percent of their salaries to keep their pensions is unconstitutional. She said it’s effectively a pay cut, something only the Michigan Civil Service Commission has the authority to enact. Ray Holman is with UAW Local 6000, the largest state employee union in Michigan. ...

Another law requiring state employees to pay more for their benefits was struck down in court today. This requirement governed pension plan contributions. Another law requiring retiree health care contributions was found unconstitutional last year.

Faberge eggs, Rodin sculptures, and a mountainside resort in Costa Rica. These are just some of the treasures being sought by Detroit pension fund lawyers. They're accusing George and Teresa Kastanes of bilking $5 million from a January 2008 pension fund investment deal. The Detroit News reports no criminal charges have been filed.

GM Renaissance Center in Detroit.
John F. Martin / Creative Commons

Today is the deadline for more than 40,000 General Motors retirees to accept their former employers offer of a lump sum buyout of their pensions. Otherwise, their pensions will be taken over by Prudential Insurance. GMs Randy Arrix said the change is part of the companys efforts to create what it calls a fortress balance sheet. Getting underfunded pensions off the books strengthens the balance sheet.

Pension obligations are very volatile, and theyre volatile because theyre dependent on some things within our control like contributions, and other things that are not, said Arrix.

Some GM retirees are angry about the change, which they see as a broken promise by GM, but for others, the buyout is an opportunity to control their own money.

Steve Carmody / Michigan Radio

LANSING, Mich. (AP) - The Michigan Senate is expected to vote on legislation that would end state-provided health care coverage in retirement for new public school hires and require current employees to pay more toward pensions.

The Wednesday legislative session is the only one scheduled for July. The Senate is expected to take up the bill passed last month by the House.

The bill doesnt contain earlier language that would force new teachers into a 401 (k)-style...

Alex Schulte / Michigan Radio

90,000 white collar Ford retirees will soon have a big decision to make. Should they stay in the auto companys pension plan? Or take their chances with a lump sum payout instead? The offer Ford Motor Company announced in late April is believed to be the first of its kind for such a large ongoing pension fund. Lump sum the buzz at Ford retirement clubs In Michigan there are more than 30 clubs for Ford retirees. The lump sum option is the conversation at retiree club meetings right now. Retirees are going to have to make a decision about mortality, about death; their own. Thats not something we do every day, Ford retiree Charles White said. White worked at the Dearborn campus for 29 years in engineering management. He retired in 1996.

Steve Carmody/Michigan Radio

Rising pension costs may throw a monkey wrench into the city of Lansings plans to hire police officers next year. Lansings mayor proposed using money from a special public safety millage to rehire nine laid off police officers. But the mayors office released a draft report Monday which says the city will have to come up with nearly two million dollars next year to cover rising police and fire pension costs. Another report by EFI Actuaries, which was hired by the citys pension boards, says the...

Allieosmar / Flickr

Democrats in Lansing plan to use this weeks tax-filing deadline to re-open the debate about last years tax overhaul at the state Capitol. Democrats think the tax issue will help them in elections this year. Seniors born after 1946 have their pensions taxed for the first time. Deductions and tax breaks for many charitable donations will be gone when state taxpayers file next year. At the same time, taxes were lowered for many businesses. Democrats intend to remind voters of that as they try to win an additional nine seats in November to take control of the state House. They say more than a dozen swing districts will be the target of fierce campaigning on the issue of taxes. Republicans says there are elements of the tax overhaul that were unpopular, but necessary to streamline and simplify tax filing and to make Michigan a more business-friendly state.

Mercedes Mejia / Michigan Radio

Teachers turned out by the hundreds in Lansing to oppose legislation that would force them to pay more for their pensions and retirement health care, or have their benefits reduced. Some of them protested outside a state Senate committee hearing today on the legislation. One of them was Pinckney teacher Sam Ziegler. He says the measure would break a promise to his profession. I knew I wasnt going to be a millionaire teaching, Ziegler said. But it was something that was worthwhile that benefited others and myself, and I was told that Id have a pension to go to and now its just slowly eroding and I see the danger that it will keep eroding away. But some Republicans like state Senator Patrick Colbeck says the public school employee pension fund has liabilities so big the system could go insolvent if nothing is done. Somebodys got to pay for that eventually, later and right now thats being pushed off because if were talking about dealing with unfunded liabilities being pushed off to the same kids that were working hard to educate right now, said Colbeck. Teachers say state government has increased the stress on the system with budget cuts that reduce districts capacity to pay into it, and forced layoffs that mean fewer people paying into the system.

Lindsey Smith / Michigan Radio

Five state lawmakers took tough questions from parents in East Grand Rapids Wednesday night. The legislative committee of the schools PTA hosted the lawmakers; four republicans and one democrat. Hot issues included a proposed bill on cyber schools and the governors proposed k-12 budget for next school year. Cyber charter schools Last year Michigan lifted the cap on how many charter schools public universities can run. Now, theres a bill proposed that would allow more cyber charter schools to operate. Many parents asked the lawmakers why cyber schools get the same amount of state money per child as brick and morter ones. State Representative Peter MacGregor (R-Rockford) said cyber schools shouldnt get as much, saying the savings should be passed on to the taxpayers. Cyber charters can be run by national for-profit companies. Tina Murua has two kids enrolled in East Grand Rapids schools. I fear that theyve couched the whole thing in terms of parental choice becausewho can argue with that? Its a brilliant strategy but it was a false choice, Murua said. She worries companies are pushing states to allow more cyber schools just to make money. The state senate already approved the cyber charter school bill. It passed the State House Education Committee in late February.


DETROIT (AP) - Ford Motor Co. says it will pump $3.8 billion into its global pension plans this year as it tries to get them closer to fully funding their obligations. The company also says that it has raised the annual pay for its 16 directors by 25 percent to $250,000. The disclosures came in Fords annual report filed Tuesday with the U.S. Securities and Exchange Commission. Ford says it will put $2 billion into the U.S. pension plan, make $350,000 in benefit payments and put the remaining $1.45 billion into other plans across the globe. The report says that as of Dec. 31, the U.S. plan was $9.4 billion short of its obligations, while global plans, which include the U.S., were short by $15.4 billion.


A new report by the Michigan League for Human Services takes a look at Michigans shifting tax policy and its impact on low-income families. The report shows what we already know, that businesses in Michigan will receive a tax cut in the state while individuals will pay more. Low income families, the reports author Joanne Bump concludes, will be hit the hardest. Bump cites an analysis of Michigans tax structure from the Institute for Taxation and Economic Policy. That analysis looked at...

Sean Marshall / Creative Commons

265 Kalamazoo City employees are eligible for the early retirement incentive. According to the citys Human Resources Director Jerome Post, 191 of them have already signed up. I have to admit Im a little surprised at the number of people, Post said the number is higher than he expected. Its been a little bit anxiety ridden for us but at the same time weve been very excited about the opportunity this presents for us to restructure virtually every department in the city, Post said. Kalamazoo...

LANSING, Mich. (AP) - Organizations representing retiree groups say they want the Michigan Legislature to repeal an unpopular tax on pensions, or lawmakers will pay the political price in the 2012 election. The AARP and groups representing public employee retirees called for a repeal Friday before the new tax plan takes effect in January. The groups say they havent ruled out filing suit in federal court to try and block the changes, but they are focused on getting lawmakers to take action....

When the Legislature returns to the state Capitol next week, there will be another item added to its to-do list. That is: coming up with millions of dollars to fill a budget gap created by the state Supreme Court decision on Michigans new pension tax. The court upheld the tax on pensions, but said denying a tax break to some higher-earners effectively created a graduated income tax. A graduated income tax is not allowed under the state constitution. That part of the decision also blew a $60 million hole in the state budget. Sixty million dollars is a small part of a general fund budget that exceeds $8 billion. But it is an amount the governor and the Legislature will need to make up to meet their obligation under the state constitution to have a balanced budget. One possibility would be to use a projected surplus from last years budget to fill the gap. That number becomes official in January. But it appears the surplus will be somewhere near $400 million. Lawmakers are already fighting over what to do with that money. Democrats say it should be used to restore some budget cuts to schools. Republicans say it should go into the states rainy day savings fund, or to pay down debt.

The Michigan Supreme Court says a new law taxing public pensions does not violate the state Constitution. The advisory opinion released today is a major victory for Governor Rick Snyder, who signed the sweeping tax changes earlier this year. Employee unions were opposed to the new law. State officials expect the law will generate as much as $330 million dollars in revenue in 2013. The court did say a portion of the law doesnt pass muster. The court ruled the tax could not be administered as a graduated income tax, which is illegal under the state constitution. And that means Governor Rick Snyder will have to go back and find more revenue or more cuts to make sure the state budget remains balanced. However, the Supreme Court says that does not stop the rest of the tax overhaul from taking effect. The court divided along party lines, with the four Republican justices making up the majority. The decision means the new tax on pensions will take effect January first largely as it was designed by Governor Rick Snyder and the Legislature. However, they will have to come up with a plan to make up some of the money they were counting on to balance the budget.

The Michigan Supreme Court will soon issue an opinion on whether the new law taxing pensions is constitutional. If they say it is, its full speed ahead for the governors plan. If they decided that taxing pensions is not constitutional, itll knock a huge hole in the budget. That means the state will have to get more revenue -- which means raising taxes. That, or roll back the business tax cuts or slash aid to education and other programs more severely than ever. And while I dont pretend to know exactly what would happen, I can tell you this, after talking to the governor last week. He isnt about to roll back the tax cuts, and he doesnt want to raise taxes.

Subterranean / Wikipedia Commons

Scores of seniors upset the state will tax some of their public pensions for the first time are expected to pack the courtroom when the Michigan Supreme Court hears oral arguments on the law. The hearing begins Wednesday morning in the Hall of Justice. The case is a major test of sweeping tax changes put in place earlier this year by Republican Gov. Rick Snyder . He wants a Supreme Court advisory opinion that would effectively pre-empt any court challenge on the law filed by opponents such as public employee unions, who say the state constitution protects their pensions from being taxed. Starting Jan. 1, pensions and some retirement income that previously was partially exempt would be taxed as regular income for those born after 1945.

user subterranean / wikimedia commons

The Michigan Supreme Court has agreed to let unions and business groups weigh in before the justices rule on whether the states new tax on pension income is legal. The court will hear arguments in the case next week. Governor Rick Snyder asked the court to cut short any legal challenges with a preemptive ruling. The governor wants an opinion from the court before the end of the month. His budget relies on $343 million dollars from taxing pensions, and he wants to avoid months or years of legal wrangling on the question. The governor asked the court to decide whether the pension tax breaks a promise by the state to retirees and public employees; and whether income limits in the law amount to a graduated income tax which is prohibited by the state constitution. The Supreme Court has agreed to accept briefs from retiree associations and unions that oppose the pension tax, as well as business groups that say the tax is fair. The Michigan Education Association, the UAW, and the AARP are among the groups that filed briefs opposing the tax. They say the pension tax breaks a promise to retirees and public employees, and it violates the state constitution. Business groups, including the Michigan Bankers Association, and the Small Business Association of Michigan, are backing Governor Rick Snyder. They say the pension tax is fair because it treats all income equally in the tax code. If the pension tax is upheld, pension income will be subject to the state income tax starting January 1, 2012.

Michigan Supreme Court

The state Supreme Court has agreed to Governor Rick Snyders request to make an early ruling on whether the new income tax on pensions violates the Michigan Constitution. Governor Snyder made the request to avoid what potentially could be years of litigation. The governor is trying to preempt an expected lawsuit from state employee unions. They say the tax on pensions will illegally reduce their agreed-to compensation under collective bargaining agreements. The Michigan Constitution says the state may not diminish nor impair the financial benefits of pension plans. The governor wants the question settled before the pension tax takes effect next year. The law extends the state income tax for the first time to pensions of people born after 1945. The Supreme Court ordered oral arguments to be held in the case in September. The court has a Republican majority.

Lester Graham / Michigan Radio

Update 5:14 p.m. Governor Rick Snyders tax overhaul plan began working its way through the Legislature today as it cleared the state House by a mostly party-line vote. The Republican tax reform bill would replace the complex and unpopular Michigan Business Tax with a corporate profits tax. Two-thirds of Michigan businesses would not have to pay the tax. Part of the revenue lost to the state would be made up by eliminating dozens of tax breaks. Many of them go to businesses and charities. Also gone would be earned income credit for working poor families and the income tax exemption for most seniors on pensions. This is a turnaround moment for Michigan, said Republican House Speaker Jase Bolger. Todays winners are our local small business owners. Todays winners are the unemployed because now those small business owners can create jobs. Democrats say its not fair to make working families and seniors make up the difference while most businesses pay less. Democratic state Representative Barb Byrum says its not a fair trade. This legislation is not a shared sacrifice and should not be adopted. Today is just another day another day to give an 82% tax break to wealthy, corporate special interests. Another day to take from our children, our seniors, and our working poor. The measure now goes to the Republican-controlled state Senate. 3:41 p.m. Governor Rick Snyders tax overhaul plan has begun its march through the Legislature. It won the approval of the state House by a mostly party-line vote. The measure would scrap the complicated and unpopular Michigan Business Tax. It would be replaced by a corporate income tax that would not be paid by two-thirds of the states businesses. Part of that lost revenue would be made up by ending many tax breaks for businesses, working poor families, and seniors on pensions.

Lester Graham / Michigan Radio

Governor Rick Snyder and Republican leadership in the State House and Senate appear to be close to a deal on the budget. From the Associated Press: Gov. Rick Snyder and Republican state lawmakers are reporting significant progress on proposals related to business and pension taxes for the fiscal year starting in October... Two people with knowledge of the talks tell The Associated Press that the proposals include many elements of Snyders original business tax plan. They spoke on the condition of anonymity because the deal hasnt been finalized. The Republican governor wants to replace the states main business tax with a 6 percent corporate tax applied to corporations with shareholders. The plan would include taxes on pensions and other retiree income but it would be modified from Snyders original proposal. The new proposal calls for phasing in or scaling back the tax. Some lawmakers have been loathe to accept any taxes on pensions, but it appears a plan to phase in a pension tax may be more palatable. Peter Luke of Booth Newspapers reports on some of the details of the agreement: Under the phased-in alternative, the status quo would apply to those 67 and up, whose pensions would continue to be tax exempt. A middle group of retirees 60 to 66 would be subject to a pension tax, but the first $20,000 of pension income for single filers - $40,000 for joint filers - would be tax exempt. Those younger than 60 would pay tax on all their pension income. An AARP spokesman said they remain opposed to a tax on pensions, whether its phased in or not. A public announcement of the agreement is expected to come this afternoon.

Some people got locked out of todays Detroit City Council meeting, where Detroit Mayor Dave Bing was laying out a 5-year budget plan that called for cutting employee pension and health care costs. Council security told citizens and several reporters that they couldnt come in because the hearing room was filled to capacity. That escalated into a dispute between security guards and the people who demanded their right to enter under the states Open Meetings Act . Detroit resident and volunteer organizer Felicia Sanders wanted to hear Bings presentation.
If you get up and youre willing to attend a meeting to fight and speak out for your city, you should be allowed to participate in the meeting. Sanders and others questioned why the City Council didnt hold the hearing in a much larger public auditorium just across the hall.

A state House committee is debating a tax-reform package that includes eliminating the states business tax and replacing its revenues with a corporate income tax and taxing pensions. Governor Snyder says he wants a state budget in place by the end of May. However, fierce divisions over how and where to reform taxes especially over whether to tax pensions are slowing negotiations. Snyders pleased with the progress on the budget so far: Things are going reasonably well in terms of that process. And were working on a very fast time frame. Were well ahead of the way things traditional done in past years. And well still on a path to get fundamental reform done. Snyder says hes not put off by the harsh criticism that his budget and tax plans have generated: Thats part of the legislative process. Thats part of democracy. But as a whole, I believe the framework we put out there will go ahead and if anything I hope it could be an improved product with the good dialogue were having today. Some Senate Republicans have said they will not vote for any pension tax. And many Democrats are upset, claiming they have been locked out of negotiations altogether.

Lester Graham / Michigan Radio

Governor Snyder, House Speaker Jase Bolger and Senate Majority Leader Randy Richardville say they have worked well together to approve many measures so far this year including the expansion of power for emergency financial managers. But one area they do not seem to agree on is how and where to reform taxes. Richardville said we actually have been disagreeing quite a bit, but he says those disagreements are fine because they are still listening to each other. Its not about disagreement, its about passion. Everybody that got elected ran as hard as they could to get here, and is passionate about getting here, said Richardville, but we have respect for the other passions in the room, so were going to get there. Disagreement over taxing pensions One area where they disagree is Governor Snyders proposal to tax pensions. Snyder says he stands by his plan, even after receiving a cool reception from many Republican legislators: For higher income people, for people who have the wherewithal to say theyre also contributing to our system I think thats a fair answer. Because thats the part of it that is, people shouldnt just look at what theyre asked to give up, but when you look at where theyre ending up. Are they being treated fairly in respect to the other citizens in our state? Governor Snyder often stresses that low-income people on pensions would not be subject to painful tax increases. Some Republicans state senators say there is no pension tax they would agree to, even one that only focuses on the very wealthy. Democrats feel left out Democratic lawmakers say they have been left out of negotiations so far. Democratic state Senator Bert Johnson says many of the Republican proposals are the reason why thousands of angry people have protested at the Capitol in recent weeks. I think we would do well all of us here in this Legislature to realize what it being said out on the front steps of the Capitol, what is being said out on the lawns of the Capitol. I think these are not crazy people these are people who have elected all of us. These are people who go out, and they vote, and they vote in numbers and theyre carrying their concerns to the Capitol. Johnson says Democratic lawmakers have been ignored in much of the work that has been done so far. He says Snyder will soon find that he needs Democratic votes as he tries to approve parts of his tax plan that are unpopular with Republicans.

(photo by Laura Weber/MPRN)

The states budget director says Governor Rick Snyders proposal to tax pensions is necessary to keep young people in the state. Budget Director John Nixon says the proposed tax will move Michigan into a sustainable future economy. Were the only state in the country to lose population in the last decade. And when you look at Michigans growth projections going forward, by 2030, 20 percent of our populations going to be retired. And what that means long term for the state is youre going to be...