TRAVERSE CITY — Mike Gillman wants to stop the bleeding.
Gillman, a Traverse City commissioner, led a discussion at Monday night's city meeting. The topic was pensions, and Gillman wants to make sure the city doesn't dig itself into a dangerous hole.
"We can try to address it now, or put it off and let the kids take care of it sometime in the future ... and the longer we put it off, the more draconian our response is going to have to be," he said. "The question is, where do we go now?"
The city has several employee bargaining units and nearly $40 million in pension liabilities. Current employee contracts don't begin to expire until 2012, but Gillman and others want to start thinking about what can be done in advance of the next round of contract talks.
Commissioners don't want to — and legally can't — alter pensions guaranteed under current contracts.
"All of us here respect the concept of contracts," Gillman said. "We made a contract with existing employees to do something, and that contract is not only between us and the employees, but it's constitutionally protected."
Among other items, Gillman believes the city should join forces with other municipalities to fight for significant changes to Michigan Public Act 312. That act provides for binding arbitration in labor contracts, but doesn't force arbitrators to take into account a municipality's ability to pay an ordered expense.
Municipal lobbyists tried in the past to get consideration of ability to pay included in PA 312, but efforts fell flat.
"One would hardly think that a proposal that arbitrators have to consider the financial health of the community would be controversial, but it didn't come out that way," Gillman said.
A move to scrap defined benefit pensions — a system in which retired employees are paid a fixed monthly income for life — was recommended by the Citizens Operational and Financial Analysis Committee, a citizens' group formed in 2007 to look at city finances.
City employees currently have defined benefit pensions, and Gillman, a member of COFAC, wants to push for a switch to defined contribution pensions in the next round of contract talks. Employers in those plans contribute to an employees pension fund each year of employment, but don't guarantee benefits after employment.
Commissioners will further discuss the issue in the coming months.
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Michael Gillman Record-Eagle/Jan-Michael Stump
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