LANSING, Mich. (AP) - In his annual speech to a statewide audience, Gov. Rick Snyder avoided asking the public what he had already floated privately with lawmakers: state aid to help Detroit emerge from bankruptcy.
It’s politically tricky terrain for the Republican governor and lawmakers uncomfortable with talk of a “bailout.” Snyder appears to have some allies in the leadership of the Republican-led Legislature, but other legislators are worried about state financial assistance to Detroit setting a precedent if other cities collapse.
They have their own spending priorities, too.
“I represent mid-Michigan taxpayers. They’re looking for more funding for their roads and their schools and their revenue sharing,” Sen. Rick Jones of Grand Ledge said after Snyder met with the Senate Republican caucus Thursday, the same day of his State of the State address. “I have to think about my constituents, the people I represent. Although I want to assist the governor in transitioning Detroit into a new vibrant city, I’m going to be very reluctant to vote for funding.”
Snyder is gauging support for a state commitment of roughly $350 million over 20 years, matching $330-plus million in commitments to date from national and local foundations to shore up Detroit’s pension plans and prevent the sale of valuable city-owned art. Other foundations are expected to soon announce their participation in the effort to help address two of the bigger issues facing the insolvent city.
Senate Majority Leader Randy Richardville, who last year introduced a bill to prohibit the sale of the Detroit Institute of Arts’ collection to help with Detroit’s financial crisis, said he had seen no plan or request, and other lawmakers said Snyder spoke more of a concept and not much specifics. But Richardville was cautiously optimistic that a solution would be put forth soon and said legislators understand the city’s importance to Michigan.
“You go around the country and around the world, most people know one city in a state. That image resonates,” the Monroe Republican said.
For GOP senators to agree to help pensioners and the art museum, he said, they would want assurances that “this is a long-term solution and not a Band-Aid.” There’s interest in seeing DIA pieces in other museums around the state and outside oversight of what critics says are mismanaged city pension funds.
Yet there are questions among lawmakers over how meaningful $350 million or so in state funding would be considering Detroit’s $18 billion or more in debt includes underfunded obligations of $3.5 billion for pensions and $5.7 billion for retiree health coverage.
One potential advantage for Snyder, federal mediators and others trying to broker a deal is that southeast Michigan is home to many of the state’s legislators, who have a particular interest in seeing the city and surrounding region turn a page. Residents in Michigan’s three biggest counties pay property taxes to fund the Detroit art museum, and city retirees at risk of pension cuts live in many legislators’ districts, not just those representing Detroit.
Sixty-six of the 148 lawmakers, more than four in 10, represent Wayne, Oakland and Macomb counties.
Sen. Bert Johnson, a Highland Park Democrat who represents parts of Detroit, said he was disappointed Snyder didn’t spend more time talking about the city in his speech other than to say he wants the bankruptcy resolved this year. That may have been partly due to a confidentiality order in the bankruptcy mediation process but also the governor’s preference to stick with Michigan’s positive “comeback” theme in an election year - not the broke city.
Johnson said Snyder will have to step up and sell the proposal like he did to cobble together a coalition to expand Medicaid.
Republican House Speaker Jase Bolger of Marshall won’t consider a “direct bailout for the city” but wants Detroit to come out of bankruptcy as soon as possible “because that means Michigan will be stronger,” spokesman Ari Adler said. He said any cash from the state would come with conditions and there are options that deserve to be explored, declining to elaborate.
The plan could involve setting aside some of Michigan’s $220-250 million-a-year payment from tobacco companies under a legal settlement. Right now, more than half automatically goes to an economic development fund and for debt service after the state securitized a portion of the settlement revenues in 2005 and 2007.
The rest, a projected $93 million in the next budget year, normally primarily goes to Medicaid and the state’s welfare program, according to a House Fiscal Agency analysis.
“This is no way, shape or form a bailout, getting money, charitable donations,” Richardville said. “There are some people that have worked all their lives whose pensions are at risk, and we’re being asked to help with that.”
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