House Votes to Temporarily Trim Legislative Employee Benefits

Michigan Capitol Confidential ^ | 5/5/2010 | Ken Braun

[MichCapCon]

A bill that would temporarily trim the taxpayer-provided 401(k) matching payments for employees of the Michigan Legislature was overwhelmingly approved on April 21, on a vote of 91-17. Just three Republicans voted against the measure, along with fourteen Democrats. A similar proposal that applies to the lawmakers themselves was approved on a vote of 99-9, with Democrats providing all nine "no" votes.

The 401(k) retirement accounts of full-time legislative employees currently receive two forms of subsidy from taxpayers:

1. An annual and automatic supplement equal to four percent of the employee's salary, regardless of whether the employee voluntarily provides any funding at all to their own retirement account; and 2. An additional supplement that can equal up to another three percent of salary. This is a dollar-for-dollar match, available only if the employee elects to contribute to their own 401(k) account from their own paycheck. (Workers may contribute more than three percent of their own money, but the dollar-for-dollar match does not apply beyond that point.)

House Bill 6011 would suspend the three percent matching payment benefit for one year, but would continue the four percent of salary automatic contributions. House Bill 6012 would make a roughly similar change for lawmaker 401(k) plans. If these become law, the Michigan House Fiscal Agency estimates a total one year savings of $1 million.

[MichCapCon]

A little bit of good news...

[mlocher]

This is merely political cover. $1M does virtually nothing for the budget deficit.