From pensioners and poverty to municipal bond markets and the mighty backlash, national and local media offered up some thought-provoking reading over the weekend after Detroit filed its Plan of Adjustment and Disclosure Statement Feb. 21.
Here are five readings we thought worth sharing:
Detroit residents who work outside the city limits could find themselves paying income tax they owe to the city under a measure Emergency Manager Kevyn Orr slipped into Friday’s filings. The Detroit News reports on what it would take at the state level to collect the estimated $140 million that’s missing from the city’s coffers.
Religion and Ethics Newsweekly weighed in focusing on the effects on pensioners and the role the religious community has (hasn’t?) played in the bankruptcy’s aftermath. “Detroit is a city where people desperately need hope.”
Bloomberg reported “The filing opens a new, potentially more contentious phase of the biggest U.S. municipal bankruptcy” in its article examining how the Plan of Adjustment relies on creditor settlements.
CNBC focused on bond insurers and the backlash to the Plan of Adjustment, finding “investors directly in the line of fire made clear Friday they were braced for a legal battle.”
The New York Times looked to post-Katrina New Orleans for lessons Detroit could learn from, writing “The scale of the two cities and the nature of their calamities differ, but Detroit can learn from New Orleans, where a fix that appeared rational to some experts and civic leaders was thrown aside for a way forward that has been slower and messier but politically more palatable and, many here believe, fairer.”
Detroit Emergency Manager Kevyn Orr’s office has released a statement about the city’s Plan of Adjustment and Disclosure Statement filed today in U.S. Bankruptcy Court.
Here’s what the city considers the highlights of the plan:
* Devotes $1.5 billion over 10 years to capital improvements, blight removal and equipment and technology upgrades.
* During the next five years, up to $500 million of the $1.5 billion will go toward blight removal.
* Proposes 20 percent payment to unsecured, non-retiree creditors in the form of new securities from the city and a pledge to increase that if the city’s finances improve.
* Assumes $465 million from third-party donors and the Detroit Institute of Arts toward the pension funds over two decades, subject to city and pension fund agreement and conditions.
* Includes Gov. Rick Snyder’s proposal to send $350 million of state money to Detroit over 20 years.
* Allows that if police and fire pensioners agree to the plan and there is some settlement with the state, they could receive more than 90 percent of their pensions with the elimination of cost-of-living allowances. General retirees cold receive in excess of 70 percent of their pensions after elimination of cost of living allowances.
* Moves current city employees into defined benefit plans.
In other development, mediations continue toward agreements with key creditors in the process overseen by Chief U.S. District Judge Gerald Rosen. Talks are ongoing for the interest-rate, pension debt swaps agreement as well as the future of the Detroit Water and Sewerage Department.
A few stories we found today:
The Detroit News ran a guest column authored by two employees of the Reason Foundation, an organization with the slogan “free minds, free markets”. They assert the pain of the bankruptcy could be “worth it” if the city finds a cost-effective way to provide services, lowers “taxes to stop the population flight,” and keeps future costs under control.
Gov. Snyder won’t begin lobbying in earnest for his proposed $350 million ($17.5 million a year for 20 years) state funding plan for Detroit until after the city files its restructuring plan, Fox 2 News reports. City officials told The Associated Press they expected to file it Friday.
Emergency Manager Kevyn Orr hadn’t tweeted (@MotownEM) since early December. But gibberish was pouring out of his Twitter account early Thursday morning. Turns out it was a hack job, the Detroit Free Press reports. While many people, institutions and Detroit’s own Nain Rouge have twitter handles (@NainRouge in case you aren’t following), Orr wasn’t enthused about the social media site, his spokesman Bill Nowling told Next Chapter Detroit last week. “I only got him the Twitter account because there were so many fake ones,” he said.in From Lansing
NextChapterDetroit’s Sandra Svoboda appeared with Michigan Public Radio Network’s Rick Pluta and State Rep. Rashida Tlaib (D-Detroit) on The Craig Fahle Show to discuss this issue.
Michigan’s term limits are widely vilified for causing damaging turnover, a loss of institutional knowledge, increased power for lobbyists and decreased cooperation among lawmakers in Lansing. But when Next Chapter Detroit started asking about how term limits have, are and will affect Detroit’s bankruptcy, their effects became debatable and complex. Political observers and elected officials interviewed had answers starting with “not much” and “that’s an interesting question.” Some said “they make it difficult to navigate” the complex legislative policy environment. Others blamed term limits for a lack of adequate or proper state support for Michigan’s largest city.“I really think we’ve lost (millions of dollars) because of term limits,” says Rep. Rashida Tlaib, (D-Detroit.)
Enacted two decades ago, Michigan’s term limits apply to the state legislature and statewide executive offices. Representatives are allowed three, two-year terms, while senators, the governor, the attorney general and secretary of state may serve two four-year terms. In the 15 years since term limits starting having an effect, Detroit has had its steepest decline. That financial collapse is linked to a variety of economic and social factors.
But there are also crucial political components in the Legislature related to the city’s run up to, filing of and eventual emergence from bankruptcy that may have gone differently without term limit dynamics also involved. For example, some of Detroit’s leaders and advocates can’t forgive the state for a revenue-sharing agreement that by some calculations has cost the city hundreds of millions of dollars. The 1998 pact, described as a “handshake deal” between then Gov. John Engler and Detroit Mayor Dennis Archer, dictated that the city would cut is income tax rates in exchange for $333.9 million annually for nine years in revenue-sharing funds.
“Many of today’s lawmakers are ignorant of those particular agreements, making them even more susceptible to the carefully scripted narrative that all of the city of Detroit’s financial challenges are self made instead of taking the time to look at some of the history,” says Ken Cole, the city’s lobbyist. “(The) broken agreements ended up costing the city hundreds of millions of dollars and contributed greatly to the financial collapse.”
Then there was the emergency manager legislation itself. While several cities and school districts have had such administrators installed by both Gov. Jennifer Granholm and Gov. Rick Snyder, the current legislation barreled through a lame duck legislature after voters rejected the previous law in late 2012. The Detroit caucus in Lansing was powerless to stop it, and Kevyn Orr arrived in the Motor City a few months later.
The Chapter 9 bankruptcy filing happened mid 2013. The next legislative battle could be over Snyder’s budget proposal to provide $17.5 million a year for 20 years to Detroit, a proposal he has been lobbying for since he proposed it to the legislature’s Joint Appropriations Committee Feb. 5.
Bruce Timmons, former legal counsel for the Michigan House Republicans, says even with his own party in power, the governor has a tough challenge. “Sadly I think there is still an anti-Detroit bias, there has been for a very long time, among Republicans,” says Timmons, who retired last year after more than four decades as a legislative staffer. He posits the limits imposed on legislators curtail the time they can spending learning, understanding and perhaps sympathizing on complicated issues.
“If you’re there long enough, you get a chance to really broaden your understanding. You get to know what’s going on,” he says. With relatively weak representation, as compared to past eras, the Detroit caucus arguably does not have the power to shift political will in the Senate and House to approve such funding.
Outstate legislators fear backlash in their home districts, assuming voters’ short memories wouldn’t allow “forgiveness” at the polls for a pro-Detroit stance on funding matters. “They don’t know they can make a tough vote and survive,” says Bill Nowling, Orr’s spokesman, who worked as a legislative staffer in Lansing in the 1990s.
But Bill Ballenger, editor and publisher of Inside Michigan Politics, cautions against assigning too much blame to term limits for how Detroit is perceived and treated in the state capitol. “The Michigan Republicans completely run the show from out state, and despite the fact they may give lip service to what’s going on in Detroit might be helped, I’ve got to tell you, there isn’t much sympathy for Detroit in the legislature today,” he says.
While Democrats have seen their influence slide with Republican majorities in both chambers, Detroit has seen its representation there cut in half as the city’s population loss is reflected in its number of legislative positions. In the 1960s, Detroit’s representation peaked with 24 representatives and 9 senators with districts drawn entirely or primarily in the city.
Today, says Zachary Gorchow, editor at Gongwer News Service, there are just 10 house and five senate districts with exclusive or significant Detroit geography. “The biggest factor that’s hurt Detroit has been you’ve got so much less representation now than you had 30 or 40 years ago,” Ballenger says.
Numbers withstanding, term limits researcher Marjorie Sarbaugh-Thompson says the post-limits environment has changed how individuals interact and relate to each other, which affects how deals are done. “There used to be friendship networks that were quote elaborate groups of friends who would be across party lines. They had opportunities where they could sit down and get a deal done,” says Sarbaugh-Thompson, a political science professor at Wayne State University. “None of these clusters of friends are bi-partisan now. Those bi-partisan clusters have vanished. They’re gone.”
With the Detroit caucus entirely Democratic and both chambers with Republican majorities, Sarbaugh-Thompson finds little cooperation happening on highly charged, partisan or complicated issues. And Detroit-related legislation is nothing if not that, term limits or not.
-By WDET’s Sandra Svoboda @WDETSandra and firstname.lastname@example.org
– Feature Image Source: Phillip Hofmeister
On the weekly DPTV MiWeek program, audiences are brought up to speed about Gov. Snyder’s proposed budget and explains what it means for Detroit. The team also discusses the downtown arena and the Detroit Water and Sewerage Department negotiations.
Michigan Public Radio Capitol Bureau Chief Rick Pluta talked to Gov. Rick Snyder about his budget proposal for the 2014-2015 year.
The governor wants the Legislature to approve $17.5 million a year (for 20 years) for Detroit. “Why is that a good investment,” Pluta asked.
In addition, Pluta chatted with WDET’s Craig Fahle about the governor’s budget priorities in the coming fiscal year.
Detroit’s bankruptcy is explored on a number of Detroit Public Television’s popular MiWeek programs. The weekly half-hour broadcast focuses on stories, people and issues in Michigan, with a large focus on southeast Michigan and Detroit.
Here are some of the programs from the first half of 2013, setting the stage for an unprecedented year in the city’s history.
In Detroit Mayor Dave Bing’s final State of the City address, he discussed the possibility of an emergency manager along with crime, business initiatives and other civic issues. View it here.
Here’s a look back at Gov. Rick Snyder announcing the appointment of an emergency manager for Detroit.
MiWeek immediately tackled the future of the city in the days after the bankruptcy filing in July on this program.