Michigan’s Governor Plans to Give $350 Million to Bankrupt Detroit

Michigan’s Governor Plans to Give $350 Million to Bankrupt Detroit

Gov. Rick Snyder wants to provide funds for pension payments for workers in Detroit, which is in bankruptcy.

Published January 23, 2014

Michigan’s governor has announced that he wants to commit $350 million of state funds to help with pension fund payments for employees of the city of Detroit, which is in bankruptcy proceedings.

Gov. Rick Snyder, a Republican, came up with a plan along with other leaders of the GOP-led legislature to provide the funds over a 20-year period.

Snyder said the funds should not be considered a bailout. Instead, he said, it should be viewed as a measure to help Detroit settle its bankruptcy with greater speed.

"If Michigan's to be a great state again, we need Detroit on a positive path to success," Snyder said.

Under the governor’s proposal, the funds would match more than $300 million that has been pledged by a number of charitable foundations in Detroit and beyond to help the bankrupt city. Those funds are also intended to help the city maintain valuable pieces of art at the Detroit Institute of Arts, works that could be placed for sale as part of the bankruptcy proceedings.

Kevyn Orr, the emergency financial manager appointed by Snyder, said that two pension funds are underfunded by about $3.5 billion. He added that the financial assistance by the state and the various foundations would be helpful, but would not come close to covering the pension costs.

It remains to see whether the proposal will be approved by the state’s legislature, where some Republicans are not yet sold on the idea.

Many officials and activists in Detroit say that the amount Snyder is seeking does not come close to dealing with the problem. And some suggest that his position is motivated by politics in a year where Snyder is expected to run for reelection.

“It strikes me as an overture aimed at Detroit’s African-American and working class people at the beginning of an election cycle,” said the Rev. David A. Bullock, the pastor of the Greater St. Matthew Baptist Church and head of Change Agent Consortium, a civil rights organization in Detroit, speaking with BET.com.

“From my perspective, emergency management, bankruptcy in Detroit and the way pensions have been handled could be very devastating public policy issues for him on the campaign trail,” Bullock said. “This is a governor who has ignored the will of the people and placed emergency managers in most of the majority African-American cities in Michigan. I think he’s depending on voters developing amnesia.”

Others have criticized the plan as offering too little.

“This plan is $350 million, but it’s over 20 years, which amounts to $17.5 million a year,” said Maurice Morton, a candidate for a congressional seat that covers half of Detroit and some of the city’s suburbs, in an interview with BET.com. “That’s a drop in the bucket.”

Morton, who is also CEO of the Detroit Academy of Arts and Sciences, said that he would prefer the entire $350 million being devoted to pension payments.

“I just think that people should come before art,” he said. “Of course, art is important. But if you’re going to commit those dollars to helping solve a problem, I think the issue facing pensioners is the greater problem in this city.”

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(Photo: Ryan Garza/Detroit Free Press/AP Photo)  

Written by Jonathan P. Hicks


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