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.
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 firstname.lastname@example.org
We’re expecting a vote today on the 11 bills related to Detroit financing and oversight.
Here’s the live stream of the Michigan House of Representatives session today.
Rep. Amanda Price (R-Park Township) hasn’t decided how she’s voting on the package of 11 bills providing Detroit with funding, restructuring and oversight, a staffer in her Lansing office told Next Chapter Detroit. But she did think an informational Town Hall meeting in her west Michigan district was worth scheduling so she could hear from her constituents. Tonight she and Rep. Earl Poleski (R-Jackson) will meet with residents and answer their questions about the legislation that today moved out of committee and to the full House for a vote that could come as soon as tomorrow.
Price told the Grand Haven Tribune:
“I have heard from a number of people with concerns about the state’s role in this process, and that is why we are holding a town hall meeting … The goal of this legislation is to ensure the proper use of state funds, while providing oversight and reform in Detroit so that this situation does not occur again.”
Incidentally, Grand Haven is home to four Detroit retirees with a handful living in adjoining zip codes, according to data provided to the House Committee on Detroit’s Recovery and Michigan’s Future by the Detroit Retired City Employees Association. Price’s staffer did not know if they would be attending.
The legislation provides $197 million of state money in a one-time payment toward Detroit’s pension funds as part of the “Grand Bargain.” That’s the arrangement, engineered by the bankruptcy court mediators, that also has the Detroit Institute of Arts and several foundations contributing $466 million toward pensions. Earlier this week, The Michigan Building and Construction Trades Council announced through the mediators it will contribute money toward the deal. House Speaker Jase Bolger (R-Marshall) has been calling on unions to provide funds to support the pensions.
-By WDET’s Sandra Svoboda
@WDETSandra and email@example.com
The House Committee on Detroit’s Recovery and Michigan’s Future today approved 11 bills providing financing and oversight for the city as part of the bankruptcy process.
The legislation now heads to the full House for a vote, expected as soon as tomorrow. The package provides $195 million as part of the “Grand Bargain,” the deal to fund pensions and protect Detroit Institute of Arts works from sale to pay creditors. The agreement also relies on DIA-raised funding, money from the philanthropic community and pensioners approving the city’s offer that reduces payments for some retirees and cuts health care and cost-of-living raises.
Some of the bills were amended, specifically adding a representative from the Detroit City Council to the oversight committee.
Rick Pluta reported for the Michigan Public Radio Network about the vote.
Here’s what some of the committee members said after the votes.
Rep. Harvey Santana (D-Detroit): “I just want to express my deepest gratitude and thank you to everyone on the committee. I think that if you look up and down at the different individuals on this committee, you will see a diversity of political ideology and different walks of life and the fact that we were able to put politics aside and really look at this from the public policy perspective among elected officials I think is very humbling, and it’s the way government should work.”
Rep. Stallworth: “This process was very complex. It continues to be complex and it has a lot of moving parts and we’ve spent a lot of hours trying to address what were viable concerns relative to the initial set of bills.”
Rep. Poleski: The bills will provide for “a healthy, prosperous Detroit sooner than later.”
Rep. Walsh: It will be subject to a vote in (the full House) … Just because it moves from this committee doesn’t mean it’s a done deal.”
The map above shows that most of Detroit’s non-uniform retirees live in Detroit, but the rest of them remaining in Michigan live throughout the state.
Using the data the Detroit Retired City Employees Association provided to the Michigan House Committee on Detroit’s Recovery and Michigan’s Future, Next Chapter Detroit mapped the zip codes where the retirees live. (The data did not include retired police or fire fighters nor retirees who live out of state. That’s below.) The highest concentrations of retirees live in northwest Detroit.
One of the furthest zip codes away that have a city retiree was in 49950, Mohawk, Mich., with one retiree. That’s 9.5 hours away from Detroit.
Shirley Lightsey, the president of the DRCEA, a voluntary membership organization that represents all retired city workers, testified before the committee May 15 in favor of the 11-bill package that provides $195 million in funding and oversight provisions for Detroit.
Here’s the map of where retired Detroit police officers and firefighters live: