County administrator holding public briefing on $345M bond issue
Washtenaw County Administrator Verna McDaniel will host a public meeting at 4:30 p.m. Thursday to answer questions regarding a $345 million bond the county will consider issuing to cover long-term pension and health care costs for its retirees.
The meeting will be at the Learning Resource Center at 4135 Washtenaw Ave., in Pittsfield Township.
County administration has also developed a new website full of links with information on the bond issue.
McDaniel planned the meeting to engage the public prior to the Washtenaw County Board of Commissioner’s back-to-back July 10 meetings, during which commissioners will take their first vote on initiating the bonding process.
The July 10 meeting also will include a public hearing on the potential $345 million bond issue at the beginning of the board’s regular meeting — which begins after 6:45 p.m.
A June 6 hearing specifically arranged on the bonding issue was sparsely attended by the public.
McDaniel first introduced the $345 million bond issue to commissioners during labor contract negotiations earlier this year.
Motivated by the impending implementation of Michigan’s new right-to-work law, the majority of the county’s unions negotiated long-term contracts. In exchange, the unions agreed to close retiree health care and pension plans that were costly for the county.
The closing of the plans meant the county could pursue issuing a massive bond to pay off the debt the county already was carrying for its retiree benefits, and to pay off the future estimated debt the county would incur.
Based on a 2011 actuary report of its employees, the county’s bond counsel estimated that figure would be about $340 million.
The county Board of Commissioners is now considering issuing a limited tax bond to pay off those unfunded liabilities. The bond does not require a vote of the people, and would not raise taxes.
The bond investment would pay-off the long-term debt — and the county would be responsible for paying off the bond throughout the next 25 years.
The payment schedule for the bond is something the county is able to manipulate — versus the increasingly large payments the county owes to its pension and health care funds year after year.
However, the success of the bond issue depends on the investment returns being at least the same as or higher than what the county pays for the bonds themselves.
Several commissioners have spoken in favor of issuing the bonds, as the payment schedule would give the county a way to manage its cash-flow issues as it faces nearly $7 million in cuts this budget cycle.