In a series of votes that could be critical for Detroit’s emergence from bankruptcy, the Michigan State House on Thursday agreed to contribute nearly $200 million in state money for a deal to spare Detroit’s retirees from larger pension cuts and to avoid selling artworks from the city’s museum.þþThe deal, which also includes pledges of hundreds of millions of dollars from private foundations, had drawn criticism from conservative groups who call it a “state bailout,” but it made it through the Republican-controlled House with relative ease after days of heated negotiation. The choice, lawmakers said, seemed less about a desirable option than some worse alternative.þþ“Bear in mind that if this goes down, we face a train wreck,” Representative Jim Townsend, a Democrat, had warned lawmakers before they cast votes on 11 bills that are part of Detroit’s unusual proposed bankruptcy settlement — a deal that has become known as The Grand Bargain. “This legislation really is not about the city’s finances,” he said. “It is about the city’s retirees.”þþThe bargain, which is still subject to support from the city’s retirees as well as a federal bankruptcy judge, also awaits approval in the State Senate, where Republicans hold a larger percentage of seats than in the House.þþOn Thursday, some House Republicans who had expressed reluctance at devoting state money to the troubled city seemed satisfied with additional measures that give state officials new oversight of Detroit’s spending, and said a settlement now would most likely cost Michigan less than a protracted bankruptcy. And Democrats, who dominate politics in Detroit, said the city’s 20,000 retirees needed the state support, even if it came with strings attached, including a financial review commission with authority over the city’s budget choices in the future.þþ“Detroit was once a vibrant city,” said Representative John Walsh, a Republican, who recalled an era when people, including his grandparents, flocked to the growing city. “It’s my belief that if we pass this package, and we reach settlement and bring conclusion, we can set Detroit back on a path to attract millions more.”þþUnder the deal, the state would send $194.8 million from its so-called rainy day fund into Detroit’s retirement systems. That fund would be paid back over 20 years with revenue the state gets from tobacco settlements.þþThe bills would also create a nine-member financial review commission — seven of whom would be appointees of the governor or state officials — to monitor Detroit’s finances for years ahead. The commission’s duties would include reviewing contracts of more than $750,000, collective bargaining agreements and operating budgets and appointing a chief financial officer.þþAnd the bills would bar the Detroit Institute of Arts, whose works would be protected from sale as part of the larger bargain, from asking for additional property tax revenues from taxpayers in three counties after current bills expire in 2022. It was uncertain how the museum would make up for the lost tax revenues, which voters in Macomb, Oakland and Wayne Counties had approved in 2012.þþSome provisions, including details of the financial review commission, received overwhelming approval, while others were mixed. Representatives voted 74 to 36 for the provision that actually authorized state money to be moved into a fund that would be used for pensions.þþRepresentative David E. Nathan, a Democrat from Detroit, told his colleagues he opposed the package because, while it sent money to retirees, it also seemed to conclude that the state’s largest city, which was taken over by a state-appointed emergency manager a year ago, ought not be allowed to run itself.þþ“This bill tramples on democracy,” Mr. Nathan said. “I don’t think anyone in this room would accept what you are asking the citizens of the city of Detroit to accept.”þ
Source: NY Times
