Michigan Legislature Considers Bills on Detroit Bankruptcy
By Kathleen Gray
Compromises on the state's plan to help the City of Detroit settle its historic bankruptcy are in the works to address concerns from both the city and the unions that represent its employees.
The city and its unions have expressed concern on several points in the 11-bill package being considered this week by the House Committee on Detroit's Recovery and Michigan's Future, including:
-- The oversight commission having approval authority over contracts worth $750,000 or more, and its vague language over how long the oversight will last.
"The mayor (of Detroit) is looking at providing alternative language on contract amount," said state Rep. John Walsh, R-Livonia, the chairman of the committee. "We're trying to find an amount or importance of a contract that will allow the city to do its business and not have the oversight commission have to meet every day of the week."
City officials estimate that more than 400 contracts have a value of at least $750,000.
Right now, the bill requires at least 20 years of oversight unless the city meets a number of thresholds and then the oversight committee will go dormant, but not away.
"There have to be objective standards that if we hit them, the oversight ends," said Detroit Mayor Mike Duggan, who came to Lansing Wednesday for individual meetings with lawmakers. "If that's a three-year period of having a balanced budget and we're running well, I think that's fair."
Walsh said that language can be tightened up to reflect a clearer path out of oversight.
-- A provision that calls for Gov. Rick Snyder to have control of six of the seven appointments to the oversight commission. He would have four direct appointments -- two of his own, as well as the state Treasurer and director of the Department of Technology, Management and Budget.
He would also make two appointments from a list of three recommendations each from the Senate majority leader and speaker of the House. The mayor of Detroit would have the final appointment. State Rep. Thomas Stallworth, D-Detroit, said the lack of city representation on the commission is a bone of contention in the city.
State Rep. Mike McCready, R-Bloomfield Hills, agreed.
"The City Council is such a big portion of the city of Detroit that they should have the ability to make an appointment as well, and maybe not as many state appointments," he said.
-- Differences between union-negotiated agreements that have been included in Detroit's most recent plan of adjustment and language in the bills. Unions are particularly concerned about the elimination of any defined benefit pension plan for new employees and replacing it with a defined contribution plan, as well as the end of retiree health care benefits.
"For the last six months, AFSCME has been working with the mediator, the Detroit emergency manager and the governor's office.
We reached agreement on a contract over a week ago and thought we had reached agreement on settling the bankruptcy," said Nick Ciaramitaro, legislative director for the American Federation of State, County and Municipal Employees Council 25. "But that began to unravel last week.The entire settlement is in peril if the Legislature doesn't recognize the progress that's been made so far."
Walsh said after the second day of hearings on the package of bills that he expects the language in the bills to be "massaged" before the bills come up for a vote next week.
And Snyder seemed to agree with the union position later in the day.
"That legislative process isn't over with. Now is the point to bring up those issues and concerns," he said after a bill signing ceremony in Lansing. "We need to respect the work that's been done in Detroit. Kevyn Orr and unions worked hard to come up with those agreements."
The package includes a $194.8-million infusion of cash to the city to be paid to the pension funds to make sure retirees are made whole -- or as close to it as possible -- by upcoming cuts to current and future benefits.
The money -- which is one component of a so-called grand bargain that also includes more than $366 million from charitable foundations and $100 million from the Detroit Institute of Arts -- will come from the state's rainy day fund and be paid back over 20 years from the revenues the state receives from the annual tobacco settlement payment.
Committee members, who will meet again after session today with scheduled testimony from Duggan, also heard from business leaders and retiree fund representatives who said the state's contribution is essential to safeguard both the city's and state's economic futures.
"You are engaged in the most important economic issue facing Michigan in a generation," said Detroit Regional Chamber President and CEO Sandy Baruah. "The price of the grand bargain today is far cheaper than the continued stagnation and continued uncertainty in the city of Detroit."
The House committee may vote on the package of bills as early as Tuesday and move the bill to the full House of Representatives.
(c)2014 the Detroit Free Press