February 21, 2018, Introduced by Senator BRANDENBURG and referred to the Committee on Finance.
A bill to amend 2001 PA 34, entitled
"Revised municipal finance act,"
by amending section 518 (MCL 141.2518), as amended by 2015 PA 46.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
518. (1) Through December 31, 2018, 2020, in connection
with the partial or complete cessation of accruals to a defined
benefit plan or the closure of the defined benefit plan to new or
existing employees, and the implementation of a defined
contribution plan, or to fund costs of a county, city, village, or
township that has already ceased accruals to a defined benefit
plan, a county, city, village, or township may by ordinance or
resolution of its governing body, and without a vote of its
electors, issue a municipal security under this section to pay all
or part of the costs of the unfunded pension liability for that
retirement program provided that the amount of taxes necessary to
pay the principal and interest on that municipal security, together
with the taxes levied for the same year, shall not exceed the limit
authorized by law.
(2)
Through December 31, 2018, 2020,
a county, city, village,
or township may by ordinance or resolution of its governing body,
and without a vote of its electors, issue a municipal security
under this section to pay the costs of the unfunded accrued health
care liability provided that the amount of taxes necessary to pay
the principal and interest on that municipal security, together
with the taxes levied for the same year, shall not exceed the limit
authorized by law or to refund in whole or in part a contract
obligation issued for the same purpose. Postemployment health care
or benefits may be funded by the county, city, village, or
township. The funding of postemployment health care benefits by a
county, city, village, or township as provided in this act shall
not constitute a contract to pay the postemployment health care
benefits.
(3) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall publish a notice of intent to issue the municipal
security. The notice of intent and the rights of referendum shall
meet the requirements of section 517(2).
(4) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall prepare and make available to the public a
comprehensive financial plan that includes all of the following:
(a) An analysis of the current and future obligations of the
county, city, village, or township with respect to each retirement
program and each postemployment health care benefit program of the
county, city, village, or township.
(b) Evidence that the issuance of the municipal security
together with other funds lawfully available will be sufficient to
eliminate the unfunded pension liability or the unfunded accrued
health care liability.
(c) A debt service amortization schedule and a description of
actions required to satisfy the debt service amortization schedule.
(d) A certification by the person preparing the plan that the
comprehensive financial plan is complete and accurate.
(e) If the proceeds of the borrowing are to be deposited in a
health care trust fund, a plan in place from the county, city,
village, or township to mitigate the increase in health care costs
and may include a wellness program that promotes the maintenance or
improvement of healthy behaviors.
(5) Municipal securities issued under this section by a
county, city, village, or township and the interest on and income
from the municipal securities are exempt from taxation by this
state or a political subdivision of this state.
(6) The proceeds of a municipal security issued under this
section may be used to pay the costs of issuance of the municipal
security. Except for a refunding, the proceeds of a municipal
security issued under this section to cover unfunded pension
liability or unfunded health care liability shall be deposited in a
health care trust fund, a trust created by the issuer which has as
its beneficiary a pension trust fund, a health care trust fund, or,
for a county, city, village, or township, a restricted fund within
a trust that would only be used to retire the municipal securities
issued
under subsection (1) or (3). (2).
A county, city, village,
or township shall have the power to create a trust to carry out the
purposes of this subsection. The trust created under this
subsection shall invest its funds in the same manner as funds
invested by a pension trust fund or a health care trust fund. The
trust
created under this subsection shall must comply with all of
the following:
(a) Report its financial condition according to generally
accepted accounting principles.
(b) Be tax-exempt under the internal revenue code.
(7) A county, city, village, or township issuing municipal
securities under this section may enter into indentures or other
agreements with trustees and escrow agents for the issuance,
administration, or payment of the municipal securities.
(8) Before a county, city, village, or township issues a
municipal security under this section, the county, city, village,
or township shall obtain the approval of the department.
(9) If a county, city, village, or township has issued a
municipal security under this section, that county, city, village,
or township shall not change the benefit structure of the defined
benefit plan if the defined benefit plan is undergoing the partial
cessation of accruals. However, a county, city, village, or
township may reduce benefits of the defined benefit plan for years
of service that accrue after the issuance of municipal securities
under this section.
(10) A county, city, village, or township shall not issue a
municipal security under subsection (1) or (2) unless the county,
city, village, or township has been assigned a credit rating within
the category of AA or higher or the equivalent by at least 1
nationally recognized rating agency.
(11) A county, city, village, or township that issues a
municipal security under subsection (1) shall covenant with the
holders of the municipal security and this state that it will not,
after the issuance of the municipal security and while the
municipal security is outstanding, rescind whatever action it has
taken to make a partial or complete cessation of accruals to a
defined benefit plan or the closure of the defined benefit plan for
new or existing employees.
(12) If a county, city, village, or township has issued a
municipal security under subsection (1) or (2), the county, city,
village, or township may issue a refunding security to refund that
municipal security under this section after December 31, 2018 if
that refunding security does not have a final maturity later than
the final maturity of the municipal security being refunded and if
the municipality that issued the municipal security has been
assigned a credit rating within the category of AA or higher or the
equivalent by at least 1 nationally recognized rating agency in
connection with the refunding security.