Michigan lawmakers introduced a package of bills yesterday that includes a $195 million appropriation toward Detroit’s pension funding but also creates a series of restrictions, oversight provisions and other conditions.
Under these proposals, the funds would be in a lump-sum payment from the “rainy day fund,” which would then be “repaid” over 20 years in $17.5 million installments from the tobacco settlement monies. Detroit would use the money to shore up pension funding and protect the Detroit Institute of Arts collection from sale. Along with $100 million from the DIA and $350 million pledged from private foundations, the state money is part of the so-called “grand bargain.”
All of the measures were referred to the House Committee for Detroit’s Recovery and Michigan’s Future, which will hold its first meeting Tuesday, May 13. Below are descriptions of the bills with links to their full texts.
House Bill 5566: Dubbed “The Oversight Commission Act,” this measure creates a seven-member panel to oversee Detroit’s fiscal operations including its finances, budgets, contracts, collective bargaining agreements, debt issuance and revenue estimates. Introduced by Rep. John Walsh (R-Livonia).
House Bill 5568: 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: If adopted, 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: 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 5572: 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: 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: 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