Imposition of property taxes to cover the cost of healthcare insurance for retired police officers & firefighters; Act 345 (1937 PA 345); MCL 38.559(2); Bate v St Clair Shores; Ruman v City of Warren; Effect of defendants’ use of separate pension & “Other Post-Employment Benefits” plans; The Headlee Amendment (Const 1963, art 9, § 31); MCL 141.91; Effect of a city official’s admissions; Distinguishing Dailey v San Diego (CA App)

The court held that Bate and its companion case, Ruman, controlled in this dispute over defendants-municipalities’ imposition of “property taxes to cover the cost of healthcare insurance for retired police officers and firefighters.” And it declined to request a conflict panel because it found Bate was based “on sound principles of statutory interpretation.” Thus, it affirmed summary disposition for defendants. Plaintiffs contended that defendants violated the Headlee Amendment. As the court in Bate framed it, the key question was “‘whether Act 345 permits defendant cities to set aside and use tax dollars to help pay for healthcare benefits to retired firefighters and police officers who are members of the retirement system.’” After considering dictionary definitions of terms not defined in the statute, the Bate court held that “cities are ‘permitted to appropriate tax dollars to help pay for healthcare benefits to retired firefighters and police officers who are members of the retirement system and entitled to those benefits.’” It addressed the “argument that the term ‘other benefits payable’ as used in MCL 38.559 referred to MCL 38.556, which described the ‘retirement benefits payable under’ Act 345 ‘with no mention of healthcare benefits.’” Plaintiffs there asserted “‘MCL 38.556 only authorized the payment of pension benefits, disability benefits, and death benefits, and therefore, it does not authorize the payment of healthcare benefits.’” But the Bate court disagreed with their interpretation. It also rejected their “argument that healthcare benefits are distinct from pension benefits as a matter of law.” The Bate court concluded that “‘cities were permitted under Act 345 to appropriate tax dollars to fund healthcare benefits for retired firefighters and police officers who are members of the retirement system and entitled to those benefits. Because the tax was authorized before the Headlee Amendment was ratified, plaintiffs cannot establish a violation of Const 1963, art 9, § 31.’” The court here also rejected plaintiffs’ assertion that a different outcome was warranted “because the trial courts disregarded defendants’ use of separate pension and OPEB plans.” Finally, plaintiffs-Watts’ argued that “they raised a factual distinction” as to defendant-Westland’s plans. But the court was not persuaded that a Westland official’s “admissions establish that Westland’s taxation to cover retirees’ healthcare benefits are factually something other than a benefit under MCL 38.559.”