Mich. House Speaker: Unions Need To Pay Part Of Bankruptcy Settlement

DETROIT (WWJ) - Michigan House Speaker Jase Bolger released a statement Friday saying that Detroit employee unions should contribute to the city's bankruptcy settlement plan if they expect $350 million from the Michigan Legislature to minimize pension cuts.

In the statement, Bolger says it's "entirely reasonable" to expect the unions to give back to the very people they profited from. AFSCME attorney Sharon Levine said earlier this week that union members should not be asked to vote for a plan that would result in larger pension cuts if the Michigan Legislature does not approve the state funding.

This comes on the heels of news that the bankruptcy case appeared to be picking up momentum with the help of behind-the-scenes negotiations with mediators. Detroit this week got the support of pension funds and a retirees' group to reduce payouts to thousands of retirees as well as employees who qualify for a future pension.

Roughly 30,000 retirees and employees still must vote in May and June, and the judge also must review Detroit's entire bankruptcy plan.

"We are also optimistic in the next several days we may be in a position to announce further agreements," said Bruce Bennett, another city attorney.

There are many concerns, however. Foundations, philanthropists and the state of Michigan are supposed to pay $816 million to shore up pensions and prevent the sale of city-owned art.

The Republican-controlled Legislature still hasn't approved the state's share, $350 million, although Gov. Rick Snyder and House and Senate leaders are on board.

Union attorney Sharon Levine said the money should be guaranteed when retirees vote. Pension cuts would be deeper without it.

"This would not be the first time they would be lied to," Levine told the judge.

Carole Neville, an attorney for a committee of retirees, said there's a need for clear disclosure about another key issue facing many pensioners. The city is proposing to recover 20 percent of what they earned in separate annuity accounts since 2003. The money would be deducted from future pension checks of non-uniformed retirees.

In the meantime, a former New York lieutenant governor is among the candidates to be interviewed as a possible expert in the Detroit bankruptcy case.

Judge Steven Rhodes wants a set of fresh, experienced eyes to offer opinions as Detroit tries to emerge from bankruptcy this year.

Richard Ravitch and others will be interviewed by Rhodes in court Friday.

The 80-year-old Ravitch has had a long career in public service in New York and has been outspoken about financial risks faced by states and local governments. He told The Associated Press that many promises no longer are affordable.

Ravitch said Detroit is the most dramatic example of "what happens when you kick the can down the road." He said he would work for free.