The Michigan Court of Appeals [official website] has ruled unanimously [opinion, PDF] that a 3 percent cut to state workers' pay to fund the retiree health care benefits violates the Michigan Constitution [text]. Specifically, the court ruled last Thursday that the legislature and former governor Jennifer Granholm lacked the authority to side-step the Civil Service Commission. Explaining the balance of power between the commission and the legislature, the court noted:
Although the commission has plenary authority over the rates of compensation, a system of checks and balances was established with the Legislature in the Michigan Constitution of 1963. Specifically, an increase in the rate of compensation authorized by the commission may be rejected or reduced by the Legislature "by a two-thirds vote of the members elected to and serving in each house" provided the vote occurs within 60 calendar days of the transmitted increase."The [L]egislature may not reduce rates of compensation below those in effect at the time of the transmission of increases authorized by the commission." The Civil Service Commission has the sole authority to fix rates of compensation. By enacting 2010 PA 185 ... the Legislature acted to reduce the compensation of classified civil servants by three percent without an accompanying agreement with the unions or the CSC. The sole authority to fix rates of compensation of classified civil servants is vested with the CSC.The state employees' triumph at the court of appeals may be short-lived as the Michigan Supreme Court may not follow the appeals court's reasoning and, ultimately, the retirement health care system remains fiscally unsustainable [Detroit Free Press report]. Current Governor Rick Snyder has not indicated whether it will appeal the ruling.
States facing monumental budget deficits have struggled to find the political consensus to reduce spending. In June, the Wisconsin Supreme Court [official website] upheld the Budget Repair Bill [JURIST report] overruling the Dane County Circuit Court finding [JURIST report] that legislators had violated the "open meetings" rule. Ruling 4-3, the court stated that the lower court Judge had "invaded the legislature's constitutional powers." The more controversial legislation in Wisconsin requires state employees to contribute a percentage of their salaries to their pension and health care premiums, and eliminates the ability of public employee union members to collectively negotiate anything but wage increase, which will be capped by the Consumer Price Index.