By JAMES M. HOHMAN
Michigan policymakers would like to raise taxes some $557 million in order to avoid structural reforms and spending cuts. Perhaps lawmakers should look at cutting their own paychecks first. Cutting legislative pay and benefits could save Michigan $11.1 million.
While this is only a fraction of their self-created $1.7 billion overspending crisis, it is a high-profile example of the excessive amounts Michigan pays to many of its government employees.
Currently, legislators in Michigan receive a base pay of $79,650, plus another $12,000 annually for expenses. Leadership positions receive added compensation of between $5,500 and $27,000. Only California lawmakers get more.
Nationwide, the average pay for full-time legislators is $68,599, or 26 percent less than Michigan, according to the National Conference of State Legislatures. Dropping our 110 representatives and 38 senators to the full-time legislator average would save $3.6 million.
But most states have part-time legislatures and lawmakers who are paid much less. If our policymakers wanted to be even more fiscally prudent they would cut legislative pay back to the U.S. average of $35,326. Cutting to this salary level would increase savings to $8.5 million.
On top of their base pay and expense accounts, Michigan legislators receive retirement, health insurance coverage and other benefits.
For newer legislators, the state makes payments into a defined-contribution retirement system, similar to the one for new state employees hired since 1997. Specifically, 4 percent of a legislator’s salary is deposited into an individual retirement fund, and the state will match an additional 3 percent. Cutting out employer contributions entirely would save another $837,000.
Legislators also receive health, dental, vision and other insurance benefits similar to what state employees receive. According to the Department of Civil Services, across the entire workforce these account for 22.39 percent of the state’s base payroll expense. While the actual dollar figures are unpublished, the average salary of a state employee is $53,453, which means this insurance coverage costs around $12,000 a year. Requiring legislators to pay for their own insurance premiums would save the state another $1.7 million.
Legislators who serve a minimum of six years also receive lifetime health insurance coverage starting at age 55. The state contributed $3.4 million in 2008 to cover these costs while beneficiaries pay 10 percent of the costs. However, since these benefits are given to legislators who have already retired, they are not included in the savings figure. Legislation has passed the House and Senate that eliminates this benefit for new lawmakers (but not current ones).
Resolutions have also been passed that would lower legislative pay in the future. However, this is part of a legislative Kabuki dance that keeps the issue in motion while never providing a conclusion.
Some of these benefit figures are estimates, but they help provide context for larger issues. Large cuts to the pay and benefits of Michigan legislators would save $11.1 million. In contrast, if the fringe benefits granted to all state, school and local government employees were reduced to match what the average private-sector worker receives, the savings would come to $5.7 billion — 513 times the savings of adjusting legislator pay and benefits alone.
Here’s the bottom line: Michigan has more government than it can afford, and pays more for that government than it should, whether the beneficiaries of the outsized pay and benefits are receptionists or legislators.
(James Hohman is a fiscal policy analyst at the Mackinac Center for Public Policy, a research and educational institute based in Midland.)