The Michigan House today passed a $195 million financial aid package for Detroit’s pensions as part of the city’s ongoing work to emerge from bankruptcy. Some of the 11 bills create state oversight of the fiscally challenged city, another prevents the Detroit Institute of Arts from renewing its millage, worth $23 million of the museum’s $31 million annual unrestricted revenues, when it expires in 8 years.
Below are descriptions of the 11 bills and their vote totals in the Michigan House of Representatives today. The bills now move to the Senate.
Detroit Emergency Manager Kevyn Orr released a statement:
“I sincerely thank the members of the Michigan House of Representatives for working swiftly, and in a bipartisan fashion, to pass legislation which is critical to Detroit’s efforts to get back on firm financial footing. The State of Michigan’s willingness to participate in a negotiated settlement that will limit financial impact to the City’s two pension funds and protect the city-owned treasures at the Detroit Institute of Arts is a critical component to the City’s proposed Plan of Adjustment. The State settlement also provides additional security to the City and its residents by creating a level of accountability designed to keep Detroit fiscally strong decades into the future. The State of Michigan is part of an unprecedented effort of private, philanthropic, labor and public support designed to lessen the financial impact to city retirees while ensuring the City has the resources it needs to reinvest in services for all of its residents.”
Gov. Rick Snyder issued a statement about the House action, which reads, in part, “This settlement will allow us to more quickly resolve the bankruptcy issues, and create a solid, sustainable fiscal foundation to support Detroit’s continuing turnaround. This is essential for the city’s 700,000 residents, who are seeing improved vital services and quality of life. But these efforts are about helping all of our state. Detroit is an important part of Michigan’s identity.”
Here are the bills, with links to their details and sponsors.
House Bill 5566: Passed 103-7. Dubbed “The Oversight Commission Act,” this measure creates a nine-member panel to oversee Detroit’s fiscal operations including its finances, budgets, contracts, collective bargaining agreements, debt issuance and revenue estimates. The original legislation was amended to include a City Council appointment. Introduced by Rep. John Walsh (R-Livonia).
House Bill 5568: Passed 85-25. This bill would require Detroit to transition new city employees from a traditional pension program to a defined contribution plan (401k) and prohibit the city from providing retirement and health care benefits greater than what state employees have available. Introduced by Rep. Gail Haines, (R-Waterford Township).
House Bill 5569: Passed 100-10. This bill would prohibit Detroit from opting out of the required 80/20 split (employer/employee) for health care premium payments. Introduced by Rep. Andrea LaFontaine, (R-Columbus Township).
House Bill 5570: Passed 105-5. This bill creates an Investment Committee make recommendations to pension fund boards and requires reports about travel and related expenses paid for by pension systems. Introduced byRep. Ken Yonker (R-Caledonia).
House Bill 5572: Passed 75-35. This is the legislation that proposes taking $194.8 million from the state’s “rainy day fund” for appropriation to Detroit. Using an interest rate of 6.75 percent, the $194.8 represents the present value of the$350 million for Detroit that Gov. Rick Snyder had proposed. Introduced by Rep. John Olumba (D-Detroit).
House Bill 5573: Passed 77-33. To pay back the $194.8 million appropriated in HB 5572, this bill dedicates $17.5 million annually from the state’s tobacco settlement fund. Introduced by Rep. Alberta Tinsley-Talabi (D-Detroit).
House Bill 5575: Passsed 75-35. Under this measure, the Michigan Settlement Administration Authority would be created to ensure the criteria are met for the state’s $194.8 million. Introduced by Rep. Fred Durhal (D-Detroit).
-By WDET’s Sandra Svoboda
@WDETSandra and email@example.com