Detroit bankruptcy

Sam Beebe / Ecotrust

Detroit’s bankruptcy is getting the headlines right now, but many governments in Michigan could be facing similar financial troubles in the future. Detroit might be just the first of many financial catastrophes in the state.

Detroit’s debt is supposed to be as much as $20 billion. About half of that is blamed on underfunded pensions and benefits for Detroit city retirees.

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It's been just over a week since Detroit became the largest city in American history to file for bankruptcy protection under Chapter 9.

Until now, that unwanted distinction belonged to Stockton, California.

Earlier this year, Bridge Magazine writer Ron French wrote an article about his visit to bankrupt Stockton and Vallejo, a California town that has emerged from bankruptcy.

As Ron puts it, if Stockton is an example of a city just being diagnosed with fiscal "cancer," Vallejo is a community that has finished chemotherapy. And so far nobody seems particularly thrilled with the results.

Ron French joined us today. 

Today we focused our attention on what it takes to run an auto company, and the future of Michigan’s automakers.

And, we met a real life "Rosie the Riveter." She helped turn out bombers at the Willow Run Bomber Plant nearly 70 years ago.

And, we a got a preview of this year's Traverse City Film Festival, which kicks off this week.

Also, we took a look at what invasive plant species are threatening the Great Lakes and what can be done to stop them.

And, more and more people are doing their shopping on their smart phones. We spoke with a man from Ann Arbor who created an app to help with mobile shopping.

Also, John Fierst with the Clarke Historical Library at Central Michigan University joined us to discuss Michigan In Letters, an online collection of letters that give insight to Michigan’s past.

First on the show, it's been just over a week since Detroit became the largest city in American history to file for bankruptcy protection under Chapter 9.

Until now, that unwanted distinction belonged to Stockton, California. 

Earlier this year, Bridge Magazine writer Ron French wrote an article about his visit to bankrupt Stockton and Vallejo, a California town that has emerged from bankruptcy.

As Ron puts it, if Stockton is an example of a city just being diagnosed with fiscal "cancer," Vallejo is a community that has finished chemotherapy. And so far nobody seems particularly thrilled with the results.

Ron French joined us today. 

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Moody's Investors Service says other financially distressed cities in the U.S. are closely watching Detroit as it goes through bankruptcy.

Analyst Anne Van Praagh  of Moody's says other cities might follow Detroit's path, if the city can jettison most of its bond debt and reduce its pension obligations.

"But if Detroit finds itself bogged down in years of onerous proceedingd, or fails to materially reduce its debt, than that may actually be a deterrent for others to follow their approach," Van Praagh notes.

AG's office

Michigan Attorney General Bill Schuette says the state constitution protects Detroit pension benefits from being reduced or eliminated by the city’s bankruptcy.

Schuette says he will be in court Monday asking to join the case on behalf of pensioners.

U.S. Bankruptcy Judge Steven Rhodes took control of lawsuits challenging the bankruptcy filing because it puts city pension benefits in jeopardy. But he has not ruled on the substance of the question, which is whether the benefits are shielded by protections in the Michigan Constitution.

Patricia Drury / Flickr

A group of Republican U.S. senators wants to prohibit the federal government from providing financial support to Detroit.

Flickr/Patricia Drury

The eyes of the nation are on Detroit, as the city navigates through the largest municipal bankruptcy in American history.  And a group of Republican U.S. senators has wasted no time responding to the prospect of federal aid for the Motor City. They've crafted amendments to two separate appropriation bills to block federal intervention in municipal bankruptcy. That's despite the fact that neither Governor Rick Snyder nor Emergency Manager Kevyn Orr have put federal assistance on the table as a solution. So, moving forward, what does all this mean for Detroit, and for the state? For this, we talk with Ken Sikkema, former senate majority leader and senior policy fellow at Public Sector Consultants, and Susan Demas, columnist with Mlive.com
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Bankruptcy hearings begin

Municipal bankruptcy hearings began yesterday in Detroit.  Federal Judge Stephen Rhodes says the bankruptcy process will progress in federal court.  Michigan Radio’s Kate Wells reports that Detroit city workers and retirees were hoping to argue the case against cutting pensions in state court. 

State Senate finished with Medicaid draft

A state Senate work group has released a plan to expand Medicaid in Michigan.  The group has worked for weeks since the state Senate adjourned for summer recess.  Michigan Radio’s Jake Neher reports that “officials in Governor Rick Snyder’s administration are already embracing the revised plan.” 

Detroit could get new sports complex

Michigan economic officials are supporting plans for a new sports arena in Detroit.  Michigan Radio’s Rick Pluta reports “The project includes a new hockey arena for the Detroit Red Wings.  It would be within walking distance of the city’s football and baseball stadiums.”

This week marks three years since an Enbridge Energy pipeline ruptured near Marshall, Michigan. More than a million gallons of tar sands oil have been cleaned up from Talmadge Creek and the Kalamazoo River, but the cleanup isn't over yet. We got an update on the cleanup efforts and what still needs to be done.

And, we heard from Michigan storyteller Allison Downey. She brought us the voices of the workers at a recent summer carnival. And, a new study at Michigan State University is investigating how dioxins affect human health. The lead researcher for this study joined us today. Also, bankruptcy isn't the only issue Detroit is facing. We took a look at how crime is plaguing the city. First on the show, eventually Detroit’s bankruptcy filing will be over. Eventually, Emergency Manager Kevyn Orr will no longer be in charge of Detroit’s finances. When those things happen, Detroit will go back to being run by its city government… by a mayor, and a city council. 

Daniel Howes, columnist at The Detroit News, focused on this future in his column yesterday in the News. He joined us today to discuss whether Detroit can shed its bad governance habits in light of the bankruptcy.

Bernt Rostad / creative commons

Eventually, Detroit’s bankruptcy filing will be over. Eventually, Emergency Manager Kevyn Orr will no longer be in charge of Detroit’s finances.

When those things happen, Detroit will go back to being run by its city government, by a mayor, and a city council.

Daniel Howes, columnist at The Detroit News, focused on this future in his column yesterday in the News. He joined us today to discuss whether Detroit can shed its bad governance habits in light of the bankruptcy.

Listen to the full interview above.

Lindsey Smith / Michigan Radio

Detroit’s bankruptcy will make it tricky to brand Michigan as the comeback state.

True to his “relentless-positive-action” style, Governor Rick Snyder didn’t let a weekend of bad news about Detroit’s dismal finances get him down.

On Wednesday morning, as a hearing on the bankruptcy was beginning in federal court in Detroit, Snyder attended a ribbon cutting ceremony for an auto supplier that’s expanding in Muskegon. He urged factory workers to spread the good news about Michigan to everyone they meet.

“I’m not talking just ‘Pure Michigan” tourism messages, Snyder told the crowd. He asked they spread the news about Michigan’s educated workforce and its culture “of making the world’s best products.”

He admitted to reporters the bankruptcy has sidelined conversations about the state’s economy.

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In Detroit today, firefighters and police came out to watch the first day of federal bankruptcy hearings.

They know their pensions could be on the line.

Detroit’s pension funds are $3.5 billion short, according to the emergency manager.

So pensions will likely be slashed as the city tries to dig out of debt.

But some Detroit employees are filing to block the bankruptcy.

Capitol Building, Lansing, MI
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This week in Michigan politics, Jack Lessenberry and Emily Fox discuss the legality of Detroit's filing for bankruptcy, Judge Steven Rhodes and the first federal bankruptcy hearing today, and the fate of Buena Vista and Inkster school districts.

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First federal bankruptcy hearing today

Detroit kicks off federal bankruptcy hearings today, and the first order of business will be deciding if the city can cut pensions to pay down its debts.

“City officials say the pension funds are $3.5 billion short. But Michigan's state constitution says you can't cut public pensions. That’s why city employees and retirees are suing to block the bankruptcy. A federal judge will consider whether the pension debate is a state or federal issue,” Michigan Radio’s Kate Wells report.

New teacher evaluations submitted to state

A new evaluation system for Michigan teachers has been submitted to the state. Under the new system, teachers would be evaluated by student growth based on standardized test scores and classroom observations of their teaching practice. The recommendations come from the Michigan Council for Educator Effectiveness. If approved by the legislature, hearings on the new system could start this summer.

Proposed bill to cut funding for the Great Lakes 

"A bill that will drastically cut federal funding for the Great Lakes Restoration Initiative was approved by a U.S. House of Representative subcommittee yesterday. The bill will cut funding from the program from an original budget of $285 million down to $60 million for the 2014 fiscal year. The bill also proposes an 80% cut in a loan fund for local sewer system upgrades," Michigan Radio's Lindsay Hall reports. 

Lawmakers in Lansing recently approved a $65 million increase in the state's Great Start Readiness Program. That's Michigan's preschool program for 4-year olds at risk of being under-prepared for kindergarten. But, many childhood advocates say that's not enough. We took a look into whether more needs to be done.

We also heard about space exploration 21st century style. We spoke to a Michigan scientist who is using Kickstarter to make his research a reality.

Also, U.S. Bankruptcy Judge Steven Rhodes will preside over the largest municipal bankruptcy in American history. We spoke with Brent Snavely of the Detroit Free Press about what we can expect from the judge.

First on the show, the Chapter 9 bankruptcy filing by the city of Detroit has some wondering if Detroit is not an isolated incident. Could other financially struggling cities be on the same path?

To help us answer this question, we turned to Michigan Democratic Congressman Dan Kildee. Kildee represents Flint and Saginaw.

Photo courtesy of the Office of Congressman Dan Kildee

The Chapter 9 bankruptcy filing by the city of Detroit has some wondering if Detroit is not an isolated incident. Could other financially struggling cities be on the same path?

Yesterday on Stateside we spoke with Eric Scorsone, economist at Michigan State University:

Certainly other cities in Michigan absolutely face these same cost pressures, whether it’s Flint or Lansing or Saginaw. They absolutely face these same problems. And, again, they’re better off relative to Detroit than today. But, they’re still facing these problems and they need to make sure they’re proactive in managing to prevent anything like this.

With that in mind, we turned to Michigan Democratic Congressman Dan Kildee. Kildee represents two of the cities Scorsone mentioned: Flint and Saginaw.

Listen to the full interview above.

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As Detroit moves into the process of Chapter 9 bankruptcy, one of the most powerful people in the city, arguably the most powerful person in the city, has become the judge to whom the case was assigned.

U.S. Bankruptcy Judge Steven Rhodes will preside over the largest municipal bankruptcy in American history, so many eyes from around the country will be trained on him.

We wanted to learn more about Judge Rhodes and for that, we turned to Detroit Free Press reporter Brent Snavely.

Listen to the full interview above.

Detroit Regional Chamber

Now that the City of Detroit has filed for bankruptcy, everyone is speculating as to how the city got to this point. 

As a former member of the Detroit City Council, Sheila Cockrel says, "The tendency on the part of some people who don't live in the city, who are not African American, who live in the region, or live in the rest of the country, want to point to a deficiency in leadership. That is absolutely incorrect."

Cockrel, who is currently a faculty member in the Honors College at Wayne State University, tells her students that poor leadership is partly to blame, but she says there are a number of other factors: disinvestment, de-industrialization and the migration of capital out of Detroit which has caused a severe reduction in revenue.

"When you take a tax base out, you don't have a viable financial basis to provide services," she says.

Cockrel served on the Detroit City Council for 16 years and says bankruptcy has been the most likely scenario for quite a while.

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The Michigan Court of Appeals has blocked further action in three lawsuits filed in Lansing that attempt to stop the Detroit bankruptcy case. The decision comes on the eve of the first hearing before a federal bankruptcy judge.

The Michigan Court of Appeals has stopped any further proceedings in the Ingham County lawsuit while a three-judge panel looks into the case.

The appeals court stayed a judge’s order that the bankruptcy filing be withdrawn, and it ordered the next round of arguments to be filed no later than the close of business Friday.

But it’s possible U.S. Bankruptcy Judge Steven Rhodes will order all lawsuits dealing with Detroit’s bankruptcy to run through his court.

Detroit city employees and pension funds say the bankruptcy filing is contrary to the Michigan Constitution. That’s because the state Constitution has specific protections for public employee pensions that could be reduced by a bankruptcy.

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Yesterday, The Daily Show’s John Oliver did a short feature on Detroit and the city’s bankruptcy. 

In a bit entitled "Chapter 9 Mile," Oliver takes a humorous look at the slow emergency response in the city and his lack of surprise that the Emergency Manager, Kevyn Orr (a bankruptcy lawyer) declares bankruptcy.

But jabs at the media make for the greatest laughs. Oliver points out the abundance of bad puns about the bankruptcy and the amount of reporting on Detroit that actually takes place in Chicago.

Today and tomorrow are anniversaries of two of the most important events in Detroit’s history, events almost never mentioned in the same breath.

Tomorrow it will be exactly three hundred and twelve years since a hundred Frenchmen scrambled up the riverbank, started cutting down trees, and establishing a fort they called Pontchartrain du Detroit.

There was an immense celebration of that anniversary a dozen years ago, a celebration virtually forgotten today. Nobody celebrates today’s anniversary, though we grimly discuss it.

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Buena Vista and Inkster school districts to be dissolved

The state is moving ahead to dissolve the Inkster and Buena Vista school districts. Both districts failed to meet a deadline yesterday to prove they could keep their doors open next school year. Now state officials say it could be a matter of days before the districts are dissolved, Michigan Public Radio's Jake Neher reports.

Protesters arrested at pipeline worksite

Enbridge energy is building a 285 mile pipeline across Michigan that will carry tar sands oil. The pipeline will replace the one that ruptured three years ago. Yesterday, protesters chained themselves to heavy equipment at a worksite southeast of Lansing. They say the new pipeline will present an environmental threat. Twelve people were arrested at a protest yesterday, Michigan Radio's Steve Carmody reports.

Will Detroit retirees see pension cuts?

A federal bankruptcy court will now be the scene for some huge decisions about the future of Detroit which filed for Chapter Nine protection last week. One of the key issues is whether retirees will see their benefits cut. Michigan Radio's Sarah Hulett has more.

Union leaders say Detroit is in bankruptcy court because “that was the strategy all along.”

They accuse Governor Snyder and Detroit emergency manager Kevyn Orr of “sham” negotiations, saying they were never able to actually sit down and bargain with Orr before he filed for Chapter 9 bankruptcy last week.

“We were disheartened by the fact that we were told negotiations were going to take place, that never took place,” says Al Garrett, President of AFSCME Council 25.”Instead, they ran to a bankruptcy court.”

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