LANSING, Mich. (AP) — Michigan lawmakers took a first step Wednesday toward committing $195 million in state money to protect Detroit retiree pensions and city-owned art as part of a broader deal designed to help end the largest public bankruptcy in U.S. history.
In bipartisan fashion, a legislative committee sent bankruptcy bills to the Republican-led House, which could vote as early as Thursday. One bill would transfer $194.8 million from Michigan's savings account to an authority that would disburse the money to Detroit's two retirement systems, if the bankruptcy judge approves a restructuring plan resolving the city's debts and other conditions are met.
The up-front state payment, the equivalent of $350 million spread over 20 years, is meant to join with $466 million in commitments over 20 years from foundations and the Detroit Institute of Arts to prevent steep cuts in pensions and the sale of art. The state's rainy day account, called the Budget Stabilization Fund, which now has $580 million, would be repaid with annual $17.5 million withdrawals from Michigan's tobacco settlement over 20 years.
Bond insurers have pointed to the art as a possible billion-dollar source of cash in the 10-month-old bankruptcy case. But the city is firmly opposed to that and instead is banking on the separate deal brokered by mediators that would protect the art forever and soften pension cuts for thousands of retirees.
Mediators announced Wednesday that the United Auto Workers will help raise "material" contributions toward retiree health care costs as part of the "grand bargain" without contributing its own funds. That news was welcomed by House Speaker Jase Bolger, R-Marshall, who has warned he might not hold a vote without unions kicking in some cash. It also came on the heels of the Michigan Building and Construction Trades Council separately agreeing to donate money.