Attorneys for the cities of Warren and St. Clair Shores argued in front of the state Supreme Court last week against taxpayers who claim state law does not allow them to include health-care benefits for police and fire retirees as part of their pensions paid by millages.

Attorneys Mark Roberts and Sonal Mithani appeared in front of the justices in Lansing in response to Warren plaintiffs David J. Peters and Cynthia A. Peters as well as St. Clair Shores plaintiff John Bate seeking application to appeal the state Court of Appeals, which in a 2023 ruling backed the cities’ interpretation to allow them to tax property owners to fund health care for first-responder retirees.

Both communities levy a millage for pension and health care for police and fire retirees.

The plaintiffs contend that the language “other benefits” in the state pension law for police and firefighters does not extend to health care. The plaintiffs’ attorney, Greg Hanley, said the cities are violating the Headlee Amendment because they are in effect taxing property owners for a retiree benefit that should not be provided.

Hanley said that benefit is not expressly included in Act 345 and has only been allowed because it has been interpreted as “other benefits.”

“The whole case is about who pays for it,” Hanley said, saying if the community provides health care to retired cops and firefighters, it could pay them via the general fund. “There is an expressed limitation on those taxes.”

But attorneys for the cities countered Hanley.

Roberts called the “other benefits” phrase “very broad” that allows the municipalities to tax property owners for both pension and health care.

“It’s not restrictive,” Mithani added.

The plaintiffs “want to artificially limit the application of Act 345 to only pensions,” Roberts said.

Mithani noted that municipal employees who are not police officers or firefighters are allowed pension and retiree health-care benefits in Public Act 202.

“It seems a bit nonsensical to say that police and firefighter retirees get the benefit of a legislatively enacted dedicated retirement system but do not get the full panel of benefits that are afforded to all other municipal retirees,” she said.

She called it “alarmist” to allege health-care retirement dollars could be or have been spent on unrelated things. She said there has been “no bags of cash or hunting lodge scenarios have yet to occur in any community” and noted the law restricts the funding so that communities cannot use the tax dollars raised from the specified millages to “build a parking garage or (pay for) water and sewer.”

She said they are “guardrails at the ballot box” to hold government officials accountable if they provide outlandish benefits by electing them out of office.

Mithani noted retiree health care benefits are negotiated between the cities and the labor unions to help them attract and retain quality workers.

“It gives the municipalities discretion to determine what additional benefits they want to attract and retain a public-safety work force,” she said. “They will negotiate together to determine what the are best retirement benefits to give those police and fire retirees.”

Roberts pointed out communities may wish to add another benefit in the future that is unforeseen at this time that could be included under the law.

He said when PA 345 passed in 1937, it was “to address a need, a funding source for police and fire retirement.”

“At the time in 1937, the retirements were primarily pensions,” he said. “Things have changed, but the intent of the statue was always to provide a dedicated funding source of funding for these first responders.”

Hanley said 38 communities in the state could be impact by a ruling.

Former Warren mayor Jim Fouts said in 2023 if the city lost the case, it would have to come up with $10 million to pay health care for police and fire retirees’ health care.

Fouts and St. Clair Shores Mayor Kip Walby said they saw the respective lawsuits as an attempted “money grab” by the plaintiffs.