CHICAGO -- Michigan Gov. Rick Snyder said he plans within a few days to sign legislation aimed at helping Detroit exit its bankruptcy and set up oversight for the post-bankrupt city.
Snyder spent Wednesday touting the bills to various local and national media. The passage of the legislation, which authorizes a $195 million cash payment to Detroit's pension funds, is a historic day in Michigan, he said.
Snyder also encouraged retirees to vote in favor of the city's plan of confirmation, saying he got legal advice clearing the way for him to weigh in on the plan and encourage 'yes' votes. Creditors have until July 11 to vote.
"This gives [retirees] strong incentive to vote 'yes,'" Snyder, referring to the legislation, said during a conference call with reporters Wednesday afternoon. "It will provide additional relief to a tough situation."
The governor called the bills' passage a "major milestone in the reinvention of Detroit" and the resolution of its bankruptcy, which is the largest Chapter 9 in the U.S.
The next milestone, he said, is the trial on the confirmation plan, which is currently set to start on July 24, though creditors have sought a delay.
"A positive outcome of that would lead to an effective date [for the city to exit Chapter 9], so Kevyn Orr can go home, back to Washington, and we'll have a mayor and city council back in charge," the governor said.
Orr is the city's emergency manager.
Snyder added that the state and city are working out contingency plans if the case is not resolved by the time Orr is scheduled to leave his post at the end of September, but wouldn't provide details.
The legislation marks Michigan's most aggressive intervention since Detroit declared bankruptcy in July.
The Senate passed the nine-bill package in a few hours Wednesday afternoon. The House passed the package two weeks ago.
It authorizes a $195 million lump-sum payment from the state to the city's pension funds as part of a deal to protect the city's art collection in a so-called "grand bargain" crucial to Detroit's bankruptcy exit plan.
The legislation also sets up an oversight board that will monitor the post-bankrupt city with the power to review all nearly all financial transactions and enacts a host of other provisions, including future labor contracts, retirement benefits, and duties of the chief financial officer.
In an earlier interview with the Detroit News editorial board, Snyder said despite the grand bargain's legislative approval, the art is "not safe" until Bankruptcy Judge Steven Rhodes signs off on the city's plan of confirmation.
In a press conference Tuesday after the Senate vote, Snyder was joined by several lawmakers, Orr, and U.S. Chief District Judge Gerald Rosen, the head mediator in the case who has taken the lead in crafting the grand bargain.
Rosen said judges don't typically meet with the media but that he would make an exception because "this is so important."
"This has been unbelievable," Rosen said. "We've set a template for how things can be accomplished in a political environment and in a nonpolitical way. And speaking from the non-political branch of government, I have to say how proud I am to have worked with [lawmakers]."
He joked that he and Orr probably talk with each other more than with their wives.
Like Snyder, Rosen said there's more work to be done before the case is resolved. But he struck an optimistic note, saying that "there's a lot of capital circling around Detroit," and "we all know the platform for Detroit has a great future."
The financial measures authorizing the $195 million payment passed in the Senate by relatively narrow margins of 21-to-17, while the oversight bills were approved by larger majorities.
"Today's vote by the Senate to approve $195 million in financial aid for the city of Detroit will help us honor the contract we made with our city retirees," Mayor Mike Duggan said in a statement. "The kind of bipartisan support we are seeing in Lansing right now is a clear sign of a new beginning for the city of Detroit."
State Sen. Coleman Young II, D-Detroit, was the only senator to vote against all bills. In a speech before the voting began, Young said the oversight provisions stripped Detroit residents of their voting rights. The lack of a defined exit for the board means the city could be ruled by the state "until the apocalypse comes," he said.
"There's no time that it is okay for you to take away the rights of people to vote," Coleman said.
In addition to the $195 million, the grand bargain includes $366 million from various non-profit foundations and $100 million from the DIA, as well as other private contributions. All the other money was contingent on the state contribution, and on the provision that the money goes only toward the pensions and no other creditors. The city has reached settlements with many of its major labor creditors based on the deal, which also calls for all current and future lawsuits against the state to be dropped.
The state will dip into its rainy day fund for the $195 million — dropping the account to $394 million from $589 million — and repay it with $17.5 million annual appropriations from tobacco settlement funds.
The state money is expected to grow to $350 million over 20 years through the pension funds' investment returns.
Earlier Tuesday, a key Senate committee speedily passed the bills and sent them on to the full Senate floor. A controversial bill the House had passed to prohibit the Detroit Institute of Arts from renewing a property tax millage died when the senators failed to take action on it.
The committee voted on the bills after about an hour of testimony. Most spoke in favor of the measures. Several business leaders from Detroit and across the state as well as representatives of retirees and pension systems spoke in favor of the bills.
"Detroit is finally seeing a comeback," Brad Williams from the Detroit Regional Chamber of Commerce said. "The problems of the city are being solved, slowly but surely. The price tag of this legislation is far better than the price tag of doing nothing."
Opposing the legislation was the conservative group Americans for Prosperity-Michigan, who characterized the $195 million contribution as a bailout.
"If we can't hold Detroit responsible, we don't believe there's going to be any meaningful change," said Annie Patnaude, AFP-Michigan's deputy state director.
