From Lansing

  • The likelihood of that $350 million from the state?

    Pledged as part of the “grand bargain” that would allow the city to retain the Detroit Institute of Arts collection and better fund pension liabilities, the $350 million from the state has gone largely undiscussed since Gov. Rick Snyder included it in his 2014-2015 budget proposal in February.

    The funds would be paid in $17.5 million installments over 20 years, the governor proposed, and would need legislative approval as part of a budget. And now, Snyder tells the Detroit Free Press, if that doesn’t come by May, it could not come at all.

    …if the Legislature breaks for the summer without acting on the funding question, “that would make it extremely difficult, period,” Snyder told the Free Press.

    Technically, the legislature could do a “Detroit deal” as a standalone bill, but usually that is much more difficult to get through. With legislators largely from out-state, widespread support for the deal seem unlikely at best. In addition, legislators might be waiting to see what concessions, if any, pensioners agree too.

    “I’m really looking to them to take the point on this in terms of saying, can they come to some agreement?” Snyder said. “If there’s an agreement, then it would be a much better process to get through the legislative process.”

    Clearly, the bankruptcy has lot of moving parts.

     

  • Midweek Medley: Three important stories about Detroit

    Revenue-sharing arguments heat up

    A $6.2 billion “fiscal crisis”. That’s what a group of mayors and the Michigan Municipal League say the state created for local governments by reducing revenue sharing during the last several years, as reported by The Detroit News.

    The Michigan Municipal League’s new estimates of lost sales tax revenue from 2003-13 included $732 million for bankrupt Detroit, $46 million for Warren and nearly $21 million for Troy. Officials also argued that, even allowing for years of fiscal shenanigans, Detroit might have avoided bankruptcy.

    As Gov. Rick Snyder’s proposed budget includes provisions for contingent increases to some municipalities, the News piece presents what could play out this year — and how some municipal leaders view the options.

    Bus routes

    Readers of the Wall Street Journal gained some insight about Detroit’s bus situation. In a piece that highlighted the low rate of car ownership, the financial constraints related to the city’s bankruptcy and Mayor Mike Duggan’s early efforts to improve the system, the WSJ found:

    …the burden falls to the city’s Transportation Department and its fleet of 460 buses. The aging behemoths ply 36 routes daily, with about 6,000 stops, and a workforce of nearly 1,200. During the past four years, the city has hired two private management firms to try to turn around its operations. But poor use of federal grants, below-average bus fares and high absenteeism among drivers has led to lower revenue, subpar service and higher costs, according to the city’s disclosure statement filed last month in bankruptcy court.

    Will Emergency Manager Kevyn Orr manage to increase fares and obtain more federal funds to hire mechanics and drivers?

    State Support

    A recent poll suggests a majority of Michigan voters favor the proposal to provide $350 million in state funds over 20 years as part of Detroit’s post-bankruptcy finance plan. As reported by MLive.com, the poll was conducted in early March by a Grand Rapids-based public relations firm that has done pro bono work for the city’s emergency manager.

    The poll, commissioned by public relations firm Lambert, Edwards & Associates and conducted by Denno Research, surveyed 600 likely voters around the state on March 8 and March 9 with a 4-percent margin of error. When asked if they would support the state aid proposal for the purpose of keeping pensions from taking more than a 34-percent cut, 61 percent of respondents said yes, 25 percent said no and 14 were undecided, according to results released Friday. When asked if they’d support spending the money for the purpose of protecting the Detroit Institute of Arts collection, 53 percent said yes, 30 percent opposed the idea and 17 percent were undecided.

    The $350 million is part of the “grand bargain,” a deal to ensure DIA artwork is not sold and pensions are funded. Other components of the plan include $100 million from the museum and $365 million from foundations.

     

     

  • Benton Harbor: No more financial emergency, now what?

    After four years in a financial emergency, it’s over for Benton Harbor. Gov. Snyder Monday announced in this news release that he has appointed a Receivership Transition Advisory Board”to help ensure a smooth transition and guide the city to continued financial stability.”

    Tony Saunders II was the second emergency manager there, and he spoke to Michigan Radio about what he did and what the next steps are for the west Michigan city.

    What does Saunders think will help keep cities out of financial emergencies?

    “People have to be willing to make tough decisions,” Saunders says. “As long as individual and elected bodies are willing to make those decision, I think that the likelihood they’ll return to emergency management decreases dramatically.”