May 6 A special Michigan legislative committee
will consider Governor Rick Snyder's proposal to allocate state
funds as part of Detroit's plan to get out of bankruptcy court,
the House speaker announced on Tuesday.
Speaker Jase Bolger, a Republican, said in a statement that
the newly created bipartisan House Committee on Detroit's
Recovery and Michigan's Future will take up a legislative
Detroit's plan for dealing with $18 billion of debt and
exiting the biggest municipal bankruptcy in U.S. history depends
on money pledged to ease the impact on retired city workers and
avoid a sale of city art work to raise money for creditors.
The $816 million, so-called grand bargain, includes $350
million in state money that Snyder has asked lawmakers to
approve. Philanthropic foundations and the Detroit Institute of
Arts pledged the rest of the money.
U.S. Judge Steven Rhodes, who is overseeing Detroit's
bankruptcy case, on Monday approved a document that will be sent
to the city's thousands of creditors for them to vote on the
debt adjustment plan. The approved final version of the
disclosure statement allows Michigan to make a single upfront
payment of about $195 million instead of $350 million spread
over 20 years.
Members of Detroit's two retirement systems would have to
vote in favor of the plan in order for the city to obtain the
$816 million over 20 years and use it to mitigate pension cuts.
Last week, Rhodes emphasized during a court hearing that if the
state money is not in place by the time the confirmation hearing
on Detroit's plan begins on July 24, votes by participants in
the retirement systems in favor of the plan would turn into
votes against the plan.
An affirmative vote would give public safety workers 100
percent of their current pensions and 45 percent of current
cost-of-living adjustments (COLAs). General city worker pensions
would be cut by 4.5 percent and COLAs eliminated.
Under a no vote, which would mean the loss of the $816
million, public safety worker pension COLAs would be gone and
the pension cut for general worker pensions would increase to 27
Detroit in recent weeks has won agreements from its two
retirement systems' boards and retiree groups and unions for
pension components of the debt adjustment plan.
(Reporting By Karen Pierog; Editing by Grant McCool)