Traverse City Record-Eagle


May 14, 2014

Orr tells Michigan lawmakers: 'We need your money'

LANSING, Mich. (AP) — Detroit's emergency manager asked lawmakers Tuesday to quickly approve nearly $195 million in state aid to help the city emerge from bankruptcy, saying frankly that to ensure a compromise on pensions does not fall apart, "We need your money."

Kevyn Orr testified at the first of four House hearings on legislation that would authorize the $194.8 million lump-sum payment from Michigan's savings account to match contributions from foundations and the Detroit Institute of Arts to prevent steep cuts in pensions and the sale of city-owned art.

A retiree with a $20,000 annual pension could lose $8,000 if the Legislature does not follow through on the pledge by Gov. Rick Snyder to help settle largest public bankruptcy in U.S. history, Orr said.

"I don't want to go over the top and use hyperbole, but for some people it would be catastrophic," he said, warning that if retirees fall into poverty, government welfare spending would rise.

Detroit is proposing to cut pensions by 4.5 percent and eliminate cost-of-living payments. Retired police officers and firefighters have a better deal that trims only cost-of-living payments.

Orr told a special committee considering the 11-bill bankruptcy package — which would put Detroit under state oversight for decades and includes other conditions that concern Democrats — that he is working under a tight timeline before the bankruptcy judge holds a trial this summer and ideally issues a decision in September.

"We have what we think is a reasonable plan," Orr said. "But to put it bluntly, we need your money."

If the state does not join the settlement, he said, pension creditors likely would not approve the plan and contributions from the art museum and foundation would be gone. Proceeds from art sales would be split among all creditors, hurting the pension system, Orr said, and possibly leaving the state on the hook for the funds' liabilities.

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