TRAVERSE CITY — Grand Traverse County officials have taken the first step toward selling $52 million worth of bonds to pay off unfunded employee retirement and health care costs.
The county commission voted during a committee meeting Wednesday to publish a notice of intent to issue bonds. The vote was the first step in a complex process that some officials said could save the county millions while fully funding its unfunded accrued retirement and health care liabilities.
But several members of the county board expressed reservations about the proposed bonding plan, including Commissioner Christine Maxbauer, who cast the only vote against publishing the notice.
“We’re going to borrow our way out of debt,” Maxbauer said. “That’s what the county board voted on.”
The county owes nearly $45 million to its employees’ pension fund and approximately $6 million in employee healthcare liabilities, though the healthcare total is based on figures from 2010.
Under the bond proposal the county would use the $52 million to pay off those debts. It could either pay off its unfunded liabilities directly to the Michigan Employee Retirement System and a retiree healthcare trust in lump sums or establish a trust with the bond money, invest it, and pay unfunded pension and health care costs from there.
Maxbauer compared the bond proposal to gambling with public money during the Wednesday committee meeting.
“Isn’t this a considerable risk with taxpayer money?” she said. “I view this as financial roulette.”
County Administrator Dave Benda said that’s not the case.
The county already owes almost $52 million in unfunded pension and healthcare costs with the vast majority of that promised to MERS. The bond proposal would equate to transferring that debt to bond holders, and would allow the county to flatten out annual debt payments while collecting investment returns from the whole $52 million over the life of the bonds, he said.