CHICAGO -- A Michigan House committee devoted to Detroit's bankruptcy unanimously approved legislation Wednesday to authorize a $195 million state contribution to shore up the city's pensions and outline post-bankruptcy oversight for the next 20 years.
The 11-bill package now heads to the full House for a vote, which could come as soon as Thursday. Gov. Rick Snyder, who supports the bills, wants a final vote before the end of June, when lawmakers break for summer recess.
"We still have plenty of work to do," Rep. John Walsh, R-Livonia, chair of the House Committee on Detroit's Recovery and Michigan's Future, said after Wednesday's hearing. "This doesn't mean it's a done deal. We'll continue to work on this."
The committee passed a series of amendments to the bills before approving them.
The financial review panel that will oversee the city for at least 20 years will now have 9 members instead of seven. The governor will no longer sit on the board but will now get two appointees and the Detroit City Council will get one. The original proposal did not include a council appointee. The state treasurer will chair the panel, which will be called the Michigan Financial Review Commission.
Acting on recommendations from Detroit Mayor Mike Duggan, the oversight bill was amended to clarify when the review panel will "go dormant" and the city will be allowed to run independently.
Lawmakers dropped a provision that requires the junk-rated city to win credit ratings of at least A-minus before state oversight dissolves. Instead, Detroit will now be required only to "prove to the commission that it can access the markets and repay the debt," said Walsh, who introduced the amendment.
Another amendment requires the city to contribute no more than 7% of an employee's base pay toward pensions or 401(k)-style retirement accounts.
Initial legislation had required the city to shift all new employees to a 401(k)-style retirement plan, but the committee dropped that requirement in the final version.
The $195 million state contribution, which will be given to the city in a lump-sum cash payment that officials expect to grow to $350 million over 20 years, is key to resolving the city's Chapter 9 case.
The contribution is part of a so-called grand bargain that features donations from private foundations and the Detroit Institute of Art that will go toward the city's pension debt. In return, the DIA will be spun off into an independent authority and its art collection protected from sale or privatization. Detroit has won settlements from most of its major labor creditors based on the success of the grand bargain.
Another bill in the package bans the DIA from seeking any future levies -- it relies now on a three-county property tax levy to finance its operations -- but allows publicly owned museums to do so.
"This process was very complex," Rep. Thomas Stallworth, D-Detroit, said after the vote. "It continues to be complex and it has a lot of moving parts and we've spent a lot of hours trying to address what were viable concerns relative to the initiative set of bills," he said. "I think we've made a tremendous amount of progress."
