LANSING – The state has reached tentative agreements with its bargaining units on new contracts for state employees. Two unions – the Michigan Corrections Organization and the Michigan State Employees Association – confirmed Wednesday the major aspects of the tentative deals between the state and their unions: a one-year contract for wages and health care starting October 1, 2016, that provides a 1 percent base wage increase, and 1.5 percent lump sum payment for employees in October 2016.
Sources told Gongwer News Service the same provisions apply to tentative agreements between the state and other unions representing state employees.
The Service Employees International Union 517M also announced a tentative agreement but did not publicly offer details.
Officials with the United Auto Workers Local 6000, the state’s largest employee union, did not return calls for comment.
“While this agreement isn’t perfect, it maintains key pieces of our contract that members said were very important to them, such as their health care costs,” MCO President Tom Tylutki said in a statement. “Our negotiations centered on the issues members told us were important. Health care is their number one concern.”
The agreements are merely tentative and still require ratification from union members as well as approval from the Civil Service Commission.
But presuming union members ratify them, it will set one key piece of the upcoming 2016-17 fiscal year budget.
Other portions of the contracts would last the traditional three years. However, the Office of State Employer pushed for a one-year deal on the wages and health care components out of concern about what will happen with the federal excise tax on premium health care plans, MCO said in a bulletin to its members.
That is the so-called Cadillac tax in the Patient Protection and Affordable Care Act. Under that law, starting with the 2018 tax year, if the aggregate cost of the health care coverage an employer provides exceeds a statutory dollar limit, then the excess is subject to a 40 percent excise tax.
The idea behind the tax was to reduce health care spending. But it is providing a rare point of agreement between Democratic supporters of the law and Republicans who have long called for the Affordable Care Act’s repeal. Unions and Democrats have said the tax should be repealed, as have Republicans and business groups, but it is unclear what will happen.
A spokesperson for the Office of the State Employer declined to comment.
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