(The following is an unpublished letter to the editor of The Grand Rapids Press regarding an excellent editorial on cost savings ideas for local government.)
Applause is in order for the Grand Rapids Press Jan. 5 editorial “How to save money for local governments,” which correctly concludes that removing barriers to freer association between local units of government can cut costs.
One reason potential savings exist is because overlapping and redundant services across governments often require a duplication of highly compensated government employees. That compensation often comes in the form of pension and health insurance benefits.
The Mackinac Center for Public Policy estimates that public employees in Michigan’s local units of government annually receive $1.73 billion more than their private-sector counterparts in benefits. These post-employment benefits may bankrupt more than few units of government in the coming years and need to be reined in.
When state and school employee benefit packages are added in, the disparity between public-sector and private-sector benefits grows to $5.7 billion. Bringing this into balance would allow Michigan to balance its budget, eliminate the Michigan Business Tax, provide $1 billion for road improvements and leave another $1 billion for a rainy day — all without cutting services, laying off employees or cutting wages.