The Michigan Supreme Court rejected a pair of plaintiffs’ attempt to force the cities of Warren and St. Clair Shores to stop using funds from a tax levy to pay for police and fire retiree health-care benefits.
The state’s high court Monday denied the application to file an appeal by David and Cynthia Peters of Warren and John Bate of St. Clair Shores “because we are not persuaded that the questions presented should be reviewed by this Court,” according to the brief order. The vote was 6-1; Justice Brian Zahra would grant leave to appeal, the court said.
The timing of the ruling provided a holiday gift for the communities, said St. Clair Shores Mayor Kip Walby.
“This is a good Christmas gift for us and a gift for all the communities” impacted by the ruling, Walby said Tuesday. “We put away money to take care of the men and women of our police and fire departments.”
St. Clair Shores Mayor Kip WalbyMACOMB DAILY FILE PHOTO
Both cities levy a millage to pay for police and fire pension and health care benefits.
Some 38 communities in all could have been affected, according to the attorney for the plaintiffs.
Walby said he and other city officials “always believed we were in the right” but were still “worried” that the court could rule against them.
If the court had sided with the plaintiffs, the cities would have to come up with millions of dollars from some other source to pay retiree health care. Walby said it would be “extremely onerous” on the cities. Former Warren mayor Jim Fouts said in 2023 if the city lost the case, it would have to come up with $10 million.
Attorneys for the two cities and the plaintiffs argued the case earlier this month in Lansing.
The court’s ruling backs a decision by the state Court of Appeals, which in 2023 supported the cities’ interpretation to allow them to tax property owners to fund health care for first-responder retirees.
The plaintiffs contended the phrase “other benefits” in the state pension law for police and firefighters does not extend to health care. Attorney Greg Hanley, arguing on behalf of both plaintiffs, said the cities violate the Headlee Amendment because they unnecessarily tax property owners for a retiree benefits. Hanley said that benefit is not expressly included in Act 345 and has only been allowed because it has been interpreted under the “other benefits” language.
He said the municipalities could use general-fund dollars to pay for it.
The cities’ lawyers countered Haney.
Mark Roberts, representing Warren, called the “other benefits” phrase “very broad” that allows the municipalities to tax property owners for both pension and health care. Sonal Mithani, representing St. Clair Shores, said the terminology is not restrictive.
The plaintiffs “want to artificially limit the application of Act 345 to only pensions,” Roberts said.
Mithani noted that municipal employees who are not police officers or firefighters are allowed pension and retiree health-care benefits in Public Act 202.
“It seems a bit nonsensical to say that police and firefighter retirees get the benefit of a legislatively enacted dedicated retirement system but do not get the full panel of benefits that are afforded to all other municipal retirees,” she said.
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Mithani pointed out retiree health-care benefits are negotiated between the cities and the labor unions to help them attract and retain quality workers.
They are “guardrails at the ballot box” to hold government officials accountable if they provide outlandish benefits, she said.
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