"Unfunded pension liabilities for public sector workers — a crisis whose warnings have grown louder since the financial downturn depressed investment returns — has graduated from a "paper crisis" to a real crisis.
Some Michigan cities are cutting services for current residents in order to pay for retiree health care or make payments to their defined benefit retirement plans.
That could lead to a dangerous spiral.
Just ask pre-bankruptcy Detroit, where pension and retiree health care obligations forced service cuts for police, fire, streetlights and other services that are necessary to attract — and retain — residents and employers.Detroit has plenty of company.
The West Michigan Policy Forum, held every two years in Grand Rapids, sponsored a special report by PricewaterhouseCoopers on seven municipalities in the state, each with staggering obligations. The analysis was intended to answer the conference question: "Why are Michigan Cities Going Broke?" (See David Walker's essay.)
...The "invisible crisis" is getting more visible.
The West Michigan forum deserves credit for helping to push this issue to the top of a business policy agenda. Port Huron City Manager James Freed may have said it best at the forum:
"We need to stop the madness. … To be quite frank, we're offering benefits that we can't afford.""
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