The state of Michigan would tap into its “rainy day” savings to put almost $200 million toward the Detroit bankruptcy settlement under bailout legislation introduced today. The savings account would be repaid from tobacco settlement money.
The state payment is part of a so-called “Grand Bargain” to mitigate cuts to pensions, and ensure that works owned by the Detroit Institute of Arts aren’t sold off as part of the city’s bankruptcy.
The plan also calls for a state-appointed financial review team to oversee contracts and spending for as long as 20 years. The oversight panel would be named by the governor, state treasurer, legislative leaders, and Detroit’s mayor. Walsh says he plans to hold two to four public hearings before the committee votes on the bailout package in coming weeks.
State Rep. Harvey Santana, D-Detroit, says some of the city’s lawmakers are already pushing back, but he supports the idea.
“We would be in our best interest to make sure we have an extra level of security to make sure the money that’s being circulated in the city of Detroit is being managed correctly,” said Santana. “I don’t think anyone that there’s anyone out there with an ounce of logic or sanity that would disagree with that.”
Santana is one of two Detroit lawmakers named to a special committee to craft the legislation.
“We seriously do not wish to be in the day-to-day operations of the city,” said state Rep. John Walsh, R-Livonia, “but we do want to assure that taxpayers that we’re keeping an eye on the money that we’ve put in there and trying to make sure that the city doesn’t fall back into trouble again.”