(Adds comments from governor, Senate Republican leader, federal
June 3 The Michigan Senate on Tuesday passed a
package of bills that includes state money to aid Detroit
retirees, a key element in the city's plan to adjust its debt
and exit the biggest municipal bankruptcy in U.S. history.
The action by the Republican-controlled Senate sends the
nine bills to Governor Rick Snyder, who has pushed lawmakers for
state money for Michigan's biggest city. The measures won
approval from the Republican-controlled House of Representatives
on May 22.
Under the so-called grand bargain in Detroit's debt
adjustment plan, Michigan's nearly $195 million lump sum
contribution, along with $466 million pledged over 20 years by
philanthropic foundations and the Detroit Institute of Arts,
would be used to ease pension cuts for city retirees. The deal
would also protect city art works from being sold to raise money
to pay city creditors and includes commitments from two unions
to raise money for retiree healthcare costs.
All of the contributions are contingent on each other and on
members of Detroit's two retirement systems agreeing to accept
minimal cuts to their pensions to help the cash-strapped city
deal with $18 billion of debt and other obligations.
Snyder, a Republican, praised the bipartisan votes on the
bills, adding that he intends to sign them in the next day or
"This package of bills will allow the grand bargain to move
forward," he told reporters. He also urged Detroit's creditors
to vote in favor of the debt adjustment plan they received last
The legislation would allow Michigan to take the money out
of its rainy day fund. The money would be paid back to the fund
over time from Michigan's share of a national settlement with
U.S. tobacco companies.
The bills also create a nine-member oversight panel that
would stay active until Detroit meets certain financial
thresholds and require the city hire a qualified chief financial
officer and submit four-year financial plans.
The bills were first passed on Tuesday by the Senate
Government Operations Committee, which sent the package to the
full chamber. The committee did not take up a bill dealing with
a property tax millage for the art museum.
State officials have warned that unless the state
participates in the settlement, Michigan could be hit with big
legal and social service costs in the wake of larger pension
reductions for Detroit retirees.
Senate Majority Leader Randy Richardville told reporters the
$195 million state contribution will save "hundreds of millions
in other costs."
The post-Senate vote news conference included U.S. District
Judge Gerald Rosen, who is leading mediation efforts in
Detroit's bankruptcy. Rosen said the legislature's vote
completes the "third leg" of the grand bargain while noting that
"we still have a ways to go in the bankruptcy."
U.S. Bankruptcy Judge Steven Rhodes, who is overseeing the
city's case, has set July 24 for the start of a hearing on
Detroit's debt adjustment plan to determine if it is fair and
(Reporting by Karen Pierog; Editing by Chizu Nomiyama, Richard
Chang and Andrew Hay)