Shortly after the Michigan Senate passed the “Grand Bargain” legislation, Annmarie Erickson, chief operating officer of the Detroit Institute of Arts, spoke with WDET. While the House passed a measure that would have restricted the museum from seeking renewal of its operating millage, a Senate committee declined to send that bill to the full chamber for a vote.
The Michigan Senate today passed a $195 million financial aid package for Detroit’s pensions as part of the bankruptcy’s “Grand Bargain.” The Senate also approved bills that create state oversight of Detroit’s operations by requiring committees to monitor the city’s finances and pension investments as well as the establishing a chief financial officer position within city government.
Prior to the full Senate vote, the chamber’s Committee on Government Operations, approved the bills. Chaired by Senate Majority Leader Randy Richardville, the committee declined to send to the full Senate a bill that would have prevented the Detroit Institute of Arts from renewing its millage. That measure, approved in 2012 by voters in Macomb, Oakland and Wayne counties is worth $23 million of the museum’s $31 million annual unrestricted revenues.
The Legislature’s passage — and governor’s expected signature — means finalization of the “grand bargain” is in the hands of the city’s pensioners. The state money and the $466 million in pledges from private foundations and the Detroit Institute of Arts is dependent on a favorable vote from both general and police/fire groups in ongoing balloting. Votes are due back in July.
“Today we are all Detroiters and we are all Michiganians,” said U.S District Court Judge Gerald Rosen following the vote. Rosen has been overseeing talks between Detroit and its creditors, and is considered the architect of the “grand bargain.”
It’s an exceptional effort from a Legislature that’s too often fractious. It’s also a vote of confidence, not only from lawmakers, but Michiganders across the state, who consistently told pollsters that they support grand bargain — the $816-million deal (comprising funds pledged by the state, philanthropic foundations and the DIA itself).
Gov. Snyder issued a statement shortly after the votes, saying, in part, “…we saw lawmakers from across the state stepping up to approve legislation that helps Detroiters – and all Michiganders. This settlement plan will allow Detroit to build a solid fiscal foundation for its continuing comeback. The bipartisan package shows the commitment of our partners in the Legislature to assist Detroit pensioners, ultimately save taxpayers millions of dollars and improve the quality of life for the city’s 700,000 residents.”
Below are descriptions of the bills, their sponsors, their vote totals in the Michigan Senate today and their votes in the Michigan House May 22.. The bills now head to Gov. Rick Snyder for signature.
House Bill 5566: Passed 36-2. (It passed the House 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 24-14. (It passed the House 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 36-2. (It passed the House 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 37-1. (It passed the House 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 by Rep. Ken Yonker (R-Caledonia).
House Bill 5573: Passed 21-17. (It passed the House 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: Passed 21-17. (It passed the House 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).
House Bill 5576: Passed 37-1. (It passed the House 98-12.) Binding arbitration for police and fire would be subject to approval from the Oversight Commission. Introduced by Rep. Joseph Haveman, (R-Holland).
The Senate Committee declined to pass two of the 11 bills out of committee. They were:
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).
-By WDET’s Sandra Svoboda
@WDETSandra and email@example.com
Another foundation has pledged money toward Detroit’s recovery with the Skillman Foundation‘s contributing $3.5 million toward retiree’s health care. The Detroit Bankruptcy Mediators made the announcement in a statement.
Skillman was not part of the coalition of 12 foundations that pledged $366 million as part of the original “Grand Bargain” funding to shore up pensions and protect the Detroit Institute of Arts collection from sale. The Skillman Foundation, according to its website, invests about $17 million annually, backed by a nearly $500 million endowment, and focuses on improving the lives of children in the city.
“In making this very meaningful and inspiring commitment, the Skillman Foundation is focused on putting kids first and preserving health care benefits for Detroit families with children and grandchildren,” the court mediators said.
Here is the full text of the statement:
Now, it’s the Michigan Senate’s turn.
The chamber’s Committee on Government Operations has a 1 p.m. hearing today to consider the state’s portion of the “Grand Bargain,” the package of bills that provide funding of and oversight for Detroit’s bankruptcy.
The Michigan House passed all 11 bills last month with votes that were far more supportive of the package than many expected. The legislation provides $195 million for Detroit pensions and creates an oversight commission that would have power over city finances. The package also contains a controversial bill preventing the Detroit Institute of Arts from renewing its millage. Following the House passage of the bills, Gov. Rick Snyder refused to say if he would sign that provision. Since it was introduced, museum supporters have been lobbying to remove that provision,
Senate Majority Leader Randy Richardville (R-Monroe), who chairs the committee, has been campaigning for the legislation. Snyder also supports it. Both men were at the Detroit Chamber’s Mackinac Policy Conference last week where they encouraged audiences to press for support.
Without the state money, the grand bargain goes away meaning the loss of some $466 million of foundation and private funds to support city pensions and protect the DIA artwork from sale.
It’s far less exciting than the other 11 bills, passed by the House last week, which would provide funding and oversight for Detroit after the city emerges from bankruptcy. Among those is the $195 million appropriation from the state to the pension fund and the proposal to prevent the Detroit Institute of Arts from renewing its existing $23 million annual millage. The bills await Senate consideration.
The special House Committee on Detroit’s Recovery and Michigan’s Future, chair by Walsh, plans a hearing on the bill June 4. The measure adds a paragraph to the existing law that prevents elected officials from holding “incompatible public offices.” The new languages reads:
(This law) does not prohibit the mayor, the chief executive officer, or a member of the legislative body of a qualified city from serving as a member of a financial review commission for the qualified city that is established under the Michigan Financial Review Commission Act.
In simple language, that means Mayor Duggan could name himself as his representative on the committee.
-By WDET’s Sandra Svoboda
@WDETSandra and firstname.lastname@example.org
Detroit Mayor Mike Duggan is celebrating state lawmakers passing a series of bills designed to help the city emerge from bankruptcy. Members of the state House approved nearly $200 million to help shore-up Detroit’s pension system – and prevent the sale of works from the Detroit Institute of Arts. But the funding, which must still be approved by the state Senate, comes with strings attached, including an oversight committee watching Detroit’s spending. WDET’s Quinn Klinefelter talked with Duggan about the measures.
Michigan Radio’s Jack Lessenberry urges restraint in reacting to the Michigan House’s passage of a bill yesterday that prevents the Detroit Institute of Arts from renewing its millage. “The point is that the grand bargain to save Detroit and its world-class museum is just a Senate vote and the governor’s pen from reality. And the politics of getting there were a real work of art,” says Lessenberry, a political commentator at our Detroit Journalism Cooperative partner.