News Story

Proposal 2 Would Cost Taxpayers $1.6 Billion Per Year, New Analysis Says

'Protect Our Jobs' initiative will be voted on in November

If Proposal 2 were to pass this November, it would cost taxpayers $1.6 billion a year in lost potential savings, according to an analysis done by the Mackinac Center for Public Policy.

An estimated $1 billion a year of the lost savings would be due to Proposal 2 superseding Gov. Rick Snyder’s mandate that all public sector employees pay at least 20 percent of their health care costs, according to the analysis done by the Mackinac Center's James Hohman and F. Vincent Vernuccio.

"Prop 2, the ‘Protect Our Jobs’ constitutional amendment, would fundamentally change the power structure in Michigan," Vernuccio said in a release. "The increased power it would give unions at the bargaining table could potentially cost taxpayers billions."

The analysis estimated that $312 million a year would be shifted to taxpayers in public school employee pension reform costs and taxpayers would pick up about $300 million annually from the loss of the privatization of school support services.

Dan Lijana, the spokesman for Protect Working Families, which supports the so-called "Protect Our Jobs" proposed amendment, didn’t respond to a request for comment.

One estimate found that if Proposal 2 was adopted, it could impact as many as 170 Michigan laws. But the biggest cost to taxpayers would be via health care.

For example, the Royal Oak School District paid 100 percent of its teachers health care premiums in 2011-12. Once a new contract is approved and all government employees pay 20 percent of their health care costs, the district can expect $894,707 in savings.

"If it (Proposal 2) passes, the sky is the limit on future contract negotiations as well," said Charles Owens, the Michigan director of the National Federation of Independent Business. "Unions are well aware they could collectively bargain anything they want. And if they get it, there is nothing anyone can do about it, even if it is unsustainable."


See also:

Michigan Capitol Confidential Coverage of Proposal 2: The 'Protect Our Jobs' Amendment