House Passes Detroit Bankruptcy Bills

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In a bipartisan effort, the Michigan House easily passed an 11-bill package to help Detroit emerge from bankruptcy.

By a 74-36 vote, lawmakers approved ultimately sending $195 million from its rainy day fund to Detroit, coupled with $466 million from 12 foundations and the Detroit Institute of Art. The museum will also be handed from the city to a private nonprofit organization as part of what the Governor calls a "settlement."

"This is about people working together," Snyder said Thursday afternoon, shortly after the package was passed. "I think this is a case where hopefully people are going to say 'why don't we succeed together?'"

An oversight commission run by the state would also oversee Detroit's finances for at least three years -- but potentially longer if Detroit struggles to rebound.

"This settlement will allow us to more quickly resolve the bankruptcy issues and create a solid, sustainable fiscal foundation to support Detroit's continuing turnaround," Snyder said in a statement. "This is essential for the city's 700,000 residents."

Rep. Andy Schor (D-Lansing) also praised the package, calling it good, not just for Detroit, but for the entire state.

"I want Michigan to be somewhere that others come and want to have jobs and want to invest money," he said. "You have to have a healthy Detroit. And these bills will get Detroit out of bankruptcy very soon."

Opponents call the legislation less of a "settlement" and more of a "bailout," saying Detroit should first be asked to sell its assets before the state steps in to help.

"We know this isn't going to fix Detroit," said Scott Hagerstrom, state director of Americans for Prosperity-Michigan. "We know they're going to be back here in a couple years looking for more money from the state."

Detroit is sitting on billions of dollars in assets, Hagerstrom said, which should be leveraged to help pensioners, who are facing steep cuts.

He says what Detroit really needs is a little "tough love."

"We're enabling bad behavior in some instances criminal behavior on the part of Detroit politicians," said Hagerstrom. "We have to stop enabling that bad behavior and criminal behavior and cut off the spigot and force Detroit to take responsibility, force it to dig down in its billions of dollars in assets, sell some of those off before going to the taxpayers of Michigan."

Hagerstrom worries about the precedent set when the state helps Detroit. Sen. Rick Jones (R-Grand Ledge) sees it that way too.

"I don't think this is an example we should set," he said. "We shouldn't be bailing out cities that have had incompetent and sometimes even criminal leadership. Detroit today. What's going to be tomorrow? Flint? And then Pontiac? Saginaw?"

Jones says his constituents would prefer their money go to the roads, rather than to Detroit. That's why he won't be voting for the bills when they reach the senate, though he acknowledges they will likely pass.

A spokesman for Senate Minority Leader Gretchen Whitmer (D-East Lansing) said Whitmer is happy the package passed and she's optimistic her chamber can put forth a similarly bipartisan effort.

There are still details to be discussed, said spokesman Bob McCann, such as handing the DIA over to a private nonprofit, but Whitmer would like the legislation passed sooner rather than later.

The senate could vote on the bills as early as Tuesday. Majority Leader Randy Richardville (R-Monroe) could send the package to committee first.

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