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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