UPDATED AT 10:30 on 5/22/14 with a correction.
Legislation providing $195 million to the Detroit bankruptcy settlement is on its way to the floor of the state House. A state House committee approved its part of the so-called “grand bargain” today. It’s designed to help pull the city out of bankruptcy, guard against the sale of city owned masterpieces at the Detroit Institute of Arts, and minimize cuts to pensions.
But timing is becoming tight for the Legislature to approve the state’s part in the so-called “grand bargain.”
Representative John Walsh chaired the special House committee on the Detroit bankruptcy. He says city retirees, in particular, have a lot at stake if the Legislature rejects the deal.
“A lot of human pain and suffering, a lot of uncertainty. I think it’s fair to say pensioners would suffer a much more dramatic cut,” he said. And that’s because it could force pensioners to take the same cuts that bankruptcy would force on the city’s other creditors. Backers of the deal say that would force many pensioners onto public assistance.
“We have very conservative estimates that of we can’t reach a settlement and there are more cuts to pensioners, the state over 20 years will realize over 20 years over $20 million in social safety costs,” said Walsh. “So these are people who will fall into the social safety net because we’re not talking about wealthy people at all.”
Now backers of the package have to sell it to the rest of the Legislature.
State Representative Gail Haines is a Republican from suburban Oakland County. She say it’s a lot of money, but every corner of Michigan has a critical interest in Detroit.
“When you are in Ann Arbor, people think of Ann Arbor as Michigan. When you’re in Traverse City, people think of Traverse City and the Mackinac area as Michigan, but if you leave this state, Detroit becomes the face of our great state.”
As GOP leaders in the Legislature, Gov. Rick Snyder, and Detroit Emergency Manager Kevyn Orr try to build support for the package, Tea Party groups like Americans for Prosperity are busy with mailers and robo-call campaigns in some Republican districts in an effort to torpedo the deal.
CORRECTION: An earlier version of this story said the Detroit Institute of Arts owned the artworks that could be sold off as part of Detroit's bankruptcy. That is incorrect. The city of Detroit owns the artwork that might be sold.