A major ratings agency has panned Michigan Gov. Rick Snyder’s proposal to save Detroit’s pension fund, calling it “troubling for bondholders" and one that appears driven by an “us versus them” mentality.

Fitch Ratings agency on Monday said Snyder’s proposal to contribute $350 million in state aid toward Detroit’s unfunded pension liability “could establish a troubling precedent” as it places pensioners ahead of bondholders. “Moreover, the governor’s comment that state funds will not bail out bondholders or Wall Street but are going to Michiganders suggests an ‘us versus them’ orientation to debt repayment that undermines willingness to pay public debt in Michigan,” Fitch said.

The black mark comes days after Snyder’s proposal was also slammed by some groups representing retiree interests. In a statement issued last week, the National Public Pension Coalition said it appreciates the gesture but that it “is far too little to avoid unconstitutional cuts in benefits for retirees who, on average, earn less than $30,000 per year.” The coalition also called on Snyder and state lawmakers to preserve the city’s pension benefits. Still, others have been more gracious. The Official Committee of Retirees, which represents Detroit’s approximately 24,000 retirees, applauds the effort but has said it would not save them from pension cuts.

Under Snyder’s plan, which has to be approved by state lawmakers, Michigan would pledge $350 million over 20 years. That amount would roughly match a $330 million commitment foundations have already made to boost pension funds and to protect the Detroit art museum from a bankruptcy asset sale.

Detroit filed for bankruptcy in July and the city’s emergency manager, Kevyn Orr, has said he intends to include cuts to Detroit’s pension payments in the city's restructuring plan. Orr has estimated Detroit's pension liability at $3.5 billion; however the pension funds' actuaries say the liability is closer to $650 million total. A federal judge ruled in December that retiree pensions can indeed be subject to haircuts along with the rest of the city’s debt in federal bankruptcy proceedings. That ruling is under appeal.

If lawmakers approve the plan, it would undermine the judge’s ruling that pensions should not be placed before bondholder debt, the ratings agency said. While recognizing that the situation in Detroit is delicate, going down that path sends the wrong message to the credit market – “As the state and city continue down what could be a long road,” Fitch said, “actions and rhetoric that suggest bondholder rights are not an important consideration will continue to damage market perception of the state and its local governments.”