Governor backs plan to give bankrupt Detroit $350M
Michigan governor backs plan to give Detroit $350M to help pension crisis, save city-owned art
Associated Press
2014-01-23 06:01 AM

LANSING, Michigan (AP) -- Michigan's governor announced a plan on Wednesday to commit $350 million in state funds to help shore up Detroit's pension funds and prevent valuable city-owned art from being sold during the debt-ridden city's bankruptcy.

Gov. Rick Snyder joined legislative leaders in outlining a proposal that would provide the money over 20 years. They acknowledged it may be a hard sell in the Republican-controlled Legislature, but said it was better than a protracted legal fight in a city facing an estimated $18 billion in debt.

He was quick to say the money wouldn't be a bailout, but rather a way to help Detroit settle its bankruptcy quickly and allow it to grow.

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

The money would match the roughly $330 million that local and national charitable foundations have pledged so far to help the insolvent city, including protecting valuable works at the Detroit Institute of Arts that could be sold as part of the bankruptcy.

Detroit's debt includes $3.5 billion in underfunded pension obligations and $5.7 billion for retiree health coverage.

Before Wednesday, Snyder hadn't talked much publicly about any potential state aid to Detroit, partly because discussions between the city and its creditors with federal mediators are private.

Snyder, a Republican, had privately gauged support among lawmakers last week for the similar plan, knowing it was politically tricky terrain. Some legislators are worried that state financial assistance to Detroit could set a precedent if other cities collapse, while others have their own spending priorities elsewhere in the state.

Election-year politicking also could come into play when lawmakers consider the plan.


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