Michigan Legislature OKs $195 Million for Detroit
Byline: Associated Press
LANSING, Mich. -- The Michigan Legislature's $195 million lifeline to help prevent steep cuts in Detroit's pensions and the sale of city-owned art is being hailed as a major step forward in ending the largest public bankruptcy in U.S. history.
The state funds will join commitments from 12 foundations and the Detroit Institute of Arts to shore up Detroit's two retirement systems. The city's art museum and its assets would be transferred to a private nonprofit.
A delighted Republican Gov. Rick Snyder and allies are hoping Tuesday's approval of the state money will immediately persuade tens of thousands of retirees and city workers to get behind the unusual pension and art rescue. They are in the midst of voting on the deal their leaders -- and now lawmakers from both parties -- have endorsed.
"I clearly encourage everybody to vote 'yes,"' the governor said during a news conference. "A protest vote is not helpful."
While there are many moving parts to state-appointed emergency manager Kevyn Orr's restructuring plan, the pension agreement is viewed as a centerpiece. If the retirees and employees do not support it, $816 million from the state, foundations and the Detroit Institute of Arts would vanish and deeper pension cuts could become inevitable.
The trial on the city's case will be held this summer.
"This has been unbelievable," U.S. District Judge Gerald Rosen, the chief mediator between the city and its creditors, said of legislators coming through with the financial package.
Despite conservative groups' opposition to bailing out Detroit, the Republican-led Senate voted 21-17 to pass the main bill allocating the $194.8 million.
Snyder said he will sign the legislation in a day or two.
"This is a good solution. This is a way we can support one another and again make it Detroit, Michigan, instead of Detroit versus Michigan," he said.
By backing the deal, the governor and legislators are hoping to avoid a protracted bankruptcy and the potential for city retirees to fall into poverty, which could cost the state an estimated $270 million in social safety net costs over 20 years. …