Costly PA 54 Exemption on its Way to the Governor

Posted on October 2, 2014 by Dene Westbrook

We were told a costly PA 54 exemption, HB 5097, was a priority for the Governor. Now it is on its way to his desk for his signature.

House Bill 5097 exempts police and fire from Public Act 54 so that they can have retroactive pay increases after a contract expires. In the House-passed version they included retroactive health care language that references PA 152 of 2011 (the 80/20, hard cap, opt out legislation). The language is confusing and unnecessary, and we suspect it will result in major issues during negotiations.

The Michigan Municipal League has strongly opposed this bill due to the detrimental financial implications for our communities.

In 2011 the legislature passed a number of reforms to help employers control costs and be better stewards of taxpayer resources. One of the, if not the, most significant reform was to prohibit retroactive pay increases after a contract has expired. This game changing statute, PA 54 of 2011, has helped communities settle contracts more quickly and provides more certainty in municipal budgets.

HOWEVER, according to the Michigan Employment Relations Commission there were only 43 PA 312 filings in 2013 as opposed to 69 in 2011. PA 312 filings are significantly lower than they were before enactment of PA 54. In addition, even if the legislature only intended this for teachers, it has been a game changer for municipal budgets, and it’s critical that we keep this tool to allow local units the opportunity to settle contracts expeditiously and save taxpayers money.

Unfortunately these arguments fell on deaf ears in the legislature, and HB 5097 passed both chambers overwhelmingly.

Samantha Harkins is the Director of State Affairs for the League.  She can be reached at [email protected] or 517-908-0306.

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