Bloomberg News

Michigan Governor Plans Firings as Unions Begin Bargaining

July 19, 2011

(Updates with spokeswoman’s comments in seventh paragraph.)

July 19 (Bloomberg) -- Michigan Governor Rick Snyder is making contingency plans to fire state employees if he cannot wrest $145 million in pay concessions from their unions through negotiations to begin next week.

Department heads were told last week to plan for dismissals and cutbacks “as a last resort” should employees not agree to concessions, Sara Wurfel, a spokeswoman for the 52-year-old Republican, said today in a telephone interview. The number of possible firings is undetermined, she said.

Contracts for the seven bargaining units expire Sept. 30, so they would have to be renegotiated. The $145 million reduction in pay or benefits is assumed in the 2011-12 budget that takes effect Oct. 1.

The cuts would affect most of the state’s approximately 47,000 employees, Wurfel said.

Ray Holman, spokesman for UAW 6000, the largest state employee union, said in a telephone interview that dismissals would be “dangerous” for prison guards and social workers who are already overloaded.

Talks with UAW 6000 are scheduled for July 26; sessions with others will follow, he said.

Wurfel said unions were told of the administration’s plans.

“We would rather come to an agreement at the bargaining table,” Wurfel said. “Layoffs are one option in any contingency plan, as are not filling vacancies, reducing travel or contracting for some services.”

Saving Medicaid

Snyder proposed $180 million in employee concessions when he released his $46 billion budget in February. He and the Republican-led Legislature agreed to reduce the planned cutback to $145 million.

Democrats, labor unions and school officials opposed the spending plan because it raised income taxes on pensions and other retirement income.

The budget reduced aid to schools and local governments, while preserving funding for Medicaid, the joint state-federal health-care program for the poor. Nearly one of five Michigan residents receives Medicaid benefits, mostly children.

A proposal to require public employees -- including teachers and elected officials -- to pay at least 20 percent of the cost of their health insurance is pending in the Legislature. Last year, the lawmakers mandated that state workers pay 3 percent of their salaries toward retiree health care. The change has been challenged in court.

Republican lawmakers, with Snyder’s backing, proposed ending health insurance for all employees under the state’s 401(k) retirement plan. Instead, they would receive lump-sum payments for medical costs, the amount based on years of service.

--Editors: Stephen Merelman, Mark Tannenbaum

To contact the reporter on this story: Chris Christoff in New York at cchristoff@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.


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