Detroit Journalism Cooperative

Gov. Snyder

Update 5:00 p.m. from Rick Pluta:

Governor Rick Snyder has proposed committing up to $350 million to help mitigate cuts to Detroit pension benefits – as well as keep assets of the Detroit Institute of Arts off the auction block.

The state’s offer would play out over 20 years and would match money raised from private donations to make sure DIA paintings, sculptures, and other works of art don’t get sold off to pay pension benefits that are central to the bankruptcy negotiations.

“This is not bailout,” he said. “This is a settlement. I want to be very clear about that.”

Snyder said one of the conditions would have to be creditors dropping any legal claims to DIA asserts.

“This is not geared toward the bondholders, bankers, or people on Wall Street,” he said. “This is geared towards Michiganders that worked really hard in our state and have a pension and are looking at a difficult situation – how do we improve that situation?” 

The governor says he hopes the state’s offer will help move the city through bankruptcy more quickly, which would be a good deal for the state.

The proposal must still be adopted by the Legislature. Republican leaders say hearings will begin very soon.

“We have some questions, some ‘t’s’ that need be crossed, some ‘i’s’ that need to be dotted, but in general is something that’s very positive and being received that way,” said state Senate Majority Leader Randy Richardville (R-Monroe). “So, we will consider it over the next few weeks. We will look in detail, and consider it as best we can.”

The governor’s offer came as Detroit bankruptcy judge Steven Rhodes refused to allow an evaluation of DIA assets to go ahead. Detroit’s creditors could still challenge the plan in bankruptcy court.

The state’s share would match contributions from private donors. It would come from money the state gets annually from the 1998 nationwide settlement between states and tobacco companies. The plan will be part of the governor’s budget proposal to be delivered Feb. 5.

Update 4:44 p.m.

Gov. Snyder and Sen. Majority Leader Randy Richardville (R-Monroe), and Speaker of the House Jase Bolger (R-Marshall) announced that they plan to support legislation aimed at saving Detroit pensions and DIA art.

From their press release:

Snyder, Senate Majority Leader Randy Richardville and House Speaker Jase Bolger announced they are working with the Michigan state legislature to allocate up to $350 million over the next 20 years to be combined with funds raised by private Michigan foundations to assist in saving retiree pensions. The governor recommends these state funds would come from tobacco settlement revenues...

“We are working on a fiscally sound mediation solution with clear conditions.  We will not participate in a bailout, nor allow these funds to go anywhere other than directly to retiree pensions,” said Snyder.  “This is an opportunity to work together to find solutions that will allow Detroit to get on a firm foundation faster, help pensioners, and ultimately save the Michigan taxpayers millions in the long run.  I want to applaud the foundations for taking this unprecedented and generous step and the mediators for facilitating these discussions.”

Snyder said there would be "strict conditions on any funds allocated towards the settlement." Money from the state, he said, must solely go toward pensions and that "independent fiduciaries manage the pension funds going forward."

Detroit's emergency manager released a statement after today's announcement saying in part:

"The level of proposed investment by the philanthropic community and the State will go far in helping reach a timely and positive resolution of the City's financial emergency.  A mutually agreed resolution to outstanding bankruptcy issues is the best way to help the City restore basic and public safety services to its 700,000 residents.  It is now time for the remaining parties to set aside the bargaining rhetoric and step forward and join this settlement to help this great city regain its footing and become once again an attractive place to live, work and invest."

MPRN will have more for us later.

11:43 a.m.

Many political deals have been dubbed a "grand bargain."

This "grand bargain" involves private money and potential state money to save Detroiters' pensions and the artwork at the Detroit Institute of Arts.

This morning federal mediators involved in the Detroit bankruptcy released a statement saying in part:

"We are advised that the governor of the State of Michigan, Rick Snyder, intends to announce soon his support for significant state participation in the plan to help protect the pensions of city of Detroit retirees, support the DIA, and revitalize the city in the aftermath of the bankruptcy. The governor  has indicated that he will engage with the Michigan Legislature to help secure this support for the plan."

Gov. Snyder is expected to hold a press conference at 3:30 announcing more details of the plan.

He'll be joined by Sen. Majority Leader Randy Richardville (R-Monroe), and Speaker of the House Jase Bolger (R-Marshall). It's a sign that these legislative leaders are supportive of the plan.

Chief bankruptcy mediator Judge Gerald Rosen struck a deal with private foundations that pledged more than $300 million to help Detroit solve the pension/art problem.

With that money pledged, state leaders took note and are deciding whether to try to match the money pledged by the foundations.

Earlier reports stated that the plan calls for sending Detroit $350 million over 20 years. 

We'll find out more details later today.

How Michigan legislators will react to this plan is anyone's guess. In their statement, federal mediators urged that "all parties approach the issue with an open mind."

Kate Boicourt / IAN

Intense negotiations regarding the future of Detroit’s Water and Sewerage Department continued behind closed doors in federal court Tuesday.

Detroit emergency manager Kevyn Orr is pushing hard for a deal that would largely transfer control of the water department to a regional water authority.

Gov. Rick Snyder

Foundations and individuals have stepped up to pledge big dollars to the struggling city of Detroit, and now Gov. Rick Synder is floating a plan to send Detroit $350 million over 20 years.

The Detroit Free Press named an anonymous source when reporting the plan this morning.

Michigan Senate Majority Leader Randy Richardville (R-Monroe) confirmed today that Snyder has floated the plan.

Ever since Detroit’s bankruptcy filing was announced last summer, there has been one major concern in the art world.

What will happen to the Detroit Institute of Arts and its world-class collection, something previously assumed to be untouchable and priceless? When emergency manager Kevyn Orr said the collection needed to be inventoried and appraised, it caused greater shock in some circles than the bankruptcy itself.

At first, I assumed this was a bluff, possibly designed to demonstrate how deep the city’s crisis really was.

But it quickly became clear that the creditors want their money by any means necessary. And for many, art takes a back seat to their stomachs. One former council member, a highly educated woman and a single parent, told me “I am tired of hearing that the pension I worked for is less important than your right to drive down here and see a Van Gogh.”


This next story is a call to anybody with $170 million to spare.

And a major fondness for art.

By now, you’ve heard about the group of philanthropists who’ve raised $330 million to strike a “grand bargain” with Detroit’s creditors.

Their goal is to raise half a billion dollars to save city-owned art at the Detroit Institute of Arts from being sold off in the city’s bankruptcy.

But that grand bargain may still require a small miracle.

Fair or not, bankruptcy pitting art against pensioners

Detroit emergency manager Kevyn Orr moved to “freeze” pension benefits for some city retirees — then suspended that action as the city and pension fund representatives talk in mediation.

Orr quietly issued that order late last month. It affects members of Detroit’s General Retirement System—not police officers or firefighters, who have their own, separate pension fund.

Detroit mayor-elect Mike Duggan will have broad powers to run the city’s day-to-day business.

Duggan and emergency manager Kevyn Orr have reached a power-sharing agreement that gives Duggan control over most city functions.

While Duggan will have substantial operational powers, he’s also promised not to “interfere” with any of Orr’s financial control.

Detroit bankruptcy judge Steven Rhodes.
John Meiu / Detroit Legal News Publishing LLC

The judge in Detroit’s bankruptcy case says creditors can appeal his recent eligibility ruling directly to a higher federal court.

Judge Steven Rhodes ruled earlier this month that Detroit is eligible to proceed with its historic bankruptcy case.

He also ruled that city pensions can be cut in federal bankruptcy court — despite a public pension guarantee in Michigan’s state constitution.

City unions, pension funds and retiree groups immediately said they intended to appeal both decisions.

Two Obama administration officials were in Detroit this week to highlight White House efforts to help Detroit.

Labor Secretary Thomas Perez and Education Secretary Arne Duncan visited Macomb Community College.

That school is one of eight Michigan community colleges sharing a $25 million grant to “create and expand innovative partnerships between community colleges and businesses” to train more workers for in-demand jobs.

Detroit Mayor Dave Bing says he’s pleased with how his administration has “moved the needle forward on Detroit’s future.”

Bing talked about his accomplishments and challenges as mayor in a farewell speech to the Detroit Economic Club Wednesday.

The Detroit Institute of Arts

What’s going to happen with the Detroit Institute of Arts?


That’s the question on the minds of many Michiganders after the city of Detroit was deemed eligible for Chapter 9 bankruptcy on Tuesday.

Daniel Howes, a business columnist with The Detroit News, talks with us about all things DIA – a recent appraisal of the institute’s collection, emergency manager Kevyn Orr’s interest in the museum, and a possible rescue plan cooked up by a federal judge.

Listen to full interview above. 

Rene Passet / Flickr

There was another plot turn in the long story of Detroit's struggles yesterday.

A federal bankruptcy judge looked at all the evidence and declared, yep, the city of Detroit is indeed insolvent.

It's new, for sure, but for many who have lived and worked in Detroit, it's just more of the same.

Derrick May is one the founding fathers of techno music. Detroit was the birthplace of the genre, and May has achieved a lot of success traveling around the world playing shows. (Listen to his breakout hit here.)

When I was growing up in the 1960s, there was a popular genre of fiction: Novels about the world when and after the presumably inevitable nuclear war happened.

One that I remember was set in rural Florida, one of the few places that avoided total destruction. The survivors set up what amounted to a working subsistence and barter economy. 

But for some, the psychological adjustment was impossible. The town banker sat among piles of paper money that he had always revered as sacred, and which suddenly had no value whatsoever. Unable to adjust, he kills himself.

Things are not nearly that bad in Detroit. But yesterday, there were clear signals that sacred cows really are going to be sacrificed. Public pensions were thought to be sacrosanct, protected by the state constitution. Well, they aren’t, according to Federal Bankruptcy Judge Steven Rhodes. Federal law trumps state law. 

Michigan Radio has been selected to receive a cooperative grant from the John S. and James L. Knight Foundation as part of the Detroit Journalism Cooperative for coverage of the city of Detroit as it moves through bankruptcy. The grant is intended to support news in the public interest and improve the quality and quantity of news coverage about Detroit. Data-driven journalism will explain the city’s financial issues and engage citizens in looking at solutions. Michigan Radio’s reporting will focus on the city’s bankruptcy and its impact on community life and the city’s future.

 A new report says declining revenues and bad Wall Street deals—not out-of-control spending or generous pension benefits--contributed the most to Detroit’s bankruptcy.

The report from the left-leaning think tank Demos also accuses Emergency Manager Kevyn Orr of attacking the problem in “inappropriate” ways that are “not rooted in fact.”

Detroit Skyline
Dave Linabury / Flickr

With the bankruptcy trial in full swing, we thought we'd share the following facts with you about the Detroit bankruptcy case.


  • State declares Detroit is in a “financial emergency” on March 1, 2013

  • Kevyn Orr appointed as Detroit’s emergency manager on March 14, 2013

  • City files for Chapter 9 bankruptcy on July 18, 2013

Detroit is in the news a lot these days, and will continue to be, for obvious reasons, as the city goes through the agony of the bankruptcy process while simultaneously conducting an election. An election, that is, for a new mayor and City Council who will be essentially figureheads until Emergency Manager Kevyn Orr leaves, something that will probably happen a little over a year from now.

But while the media is concentrating on the bankruptcy itself, I sense that we aren’t asking the really important questions. For me, the most important of all is simply this: What happens after bankruptcy is over?

There are streets in Detroit that bear an uncanny resemblance to Germany at the end of World War II. The shells of red brick buildings stand, most of them burned out, roofless, some with homeless and destitute people squatting in the ruins.

Looking at a street like that the other day, I was struck by the thought that throughout the last year of the Second World War, as vast armies raged across Europe, there were teams of planners in Washington and elsewhere working on how to govern the conquered nations after the war; How to lead them on an eventual path to a return to normalcy and democratic self-government.

Steven Depolo / Creative Commons

It’s a question many in local governments across the state have been asking themselves lately.

There are a couple ways Detroit’s bankruptcy could have a bad influence on other local governments.

The simple way: not so good national media attention

The simplest way is all that bad press the nation’s biggest municipal bankruptcy will bring. But Detroit’s finances have been screwed up for decades. That’s not news. Economists that track indicators in West Michigan say it won’t help, but they do not expect this to be a big factor.

The more important way Detroit’s bankruptcy could affect small governments is much more complicated.

The complicated way: “unprecedented” threats to municipal bonds

First, you’ve got to understand these bonds are really important to local governments.