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Michigan Panel Approves Detroit Bankruptcy Bills Pledging $195M In State Funds

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LANSING (WWJ/AP) - Michigan lawmakers have taken an initial step toward helping bankrupt Detroit by committing $195 million in state money to protect city retirees from steep pension cuts.

A legislative committee on Wednesday approved 11 bankruptcy bills, almost entirely with bipartisan 5-0 votes.

One revision makes room for a city council designee on a nine-member board that would review Detroit’s budgeting.

Another change gives the oversight committee dominated by state appointees flexibility to not approve all city contracts above $750,000. Another change forces the oversight board to go dormant if Detroit continually makes sound financial decisions.

The committee’s chairman, Republican Rep. John Walsh of Livonia, says he feels good about the committee’s work, but “we’re going to have our hands full” gaining support in the Republican-led House.

WWJ Lansing Bureau Chief Tim Skubick  reports that Detroit Mayor Mike Duggan had several objections to the bill as originally drafted.

“Basically, his objections were addressed,” Skubick said. “For example, Detroit City Council will get a seat on oversight commission. There’s also language, we are told, to get that oversight commission out of the business of vetoing Detroit’s budget decisions and giving that power to the mayor and the city council in a timely manner.”

The legislation also got the blessing of the AFSCME union lobbyist that’s been monitoring these talks as well, Skubick said.

The measure will now go the House floor where a vote could come as early as Thursday.

What are its chances?

“It is not an easy sell, as many people are concerned about this being a continuing problem for Detroit,” said Skubick. “We talked to an insider who said the votes aren’t there yet; they’re working on that right now.”

Meantime, The United Auto Workers union has agreed to help fund the health care costs for retired Detroit employees in the bankruptcy process.

U.S. District Court mediators say that the union and its supporters “will be participating in the so-called `grand bargain”‘ to cover retiree costs and guard the art collection. The announcement doesn’t say how much the UAW will contribute.

But not all Detroit retirees, meeting this week to discuss the impact of all this, believe the on-going bankruptcy talks are such a “Grand Bargain” as the proposed deal has been billed.

Kenneth Troupe, a retiree from Detroit’s finance department, told WWJ’s Jon Hewett the uncertainty has been difficult to handle.

“If I vote yes for this, I lose all my abilities to sue,” said Troupe. “I think what a lot of people are thinking, especially myself, is if other municipalities go through this or other rulings come down where they nullity then we’re stuck where we are, and I don’t think that’s fair.”

If pension beneficiaries eventually approve the plan, members of the police and fire unions would see no pension cuts but would have future reductions in cost-of-living increases and health care, while non-emergency retirees would see about a 4.5 percent percent reduction in their pension benefits.

Continuing Coverage: Detroit Bankruptcy

TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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