LANSING (AP) — Detroit’s emergency manager outlined his bankruptcy restructuring plan to Michigan lawmakers last week, answering questions behind closed doors while saying they should act soon on a $350 million state bailout to help the city emerge from insolvency.
Kevyn Orr met with Democrats and majority Republicans, including House Speaker Jase Bolger, whose demand that unions add an unspecified amount to an $800 million-plus settlement to prevent steep cuts in pensions and the sale of valuable art has not been embraced by Republican Gov. Rick Snyder.
Orr declined to criticize Bolger’s request, saying he traveled to Lansing to explain his plan in the wake of recent momentum in negotiations with creditors.
“We’re reaching deals with both our creditors and our unions that we think make sense, that just in good faith we think they’re committed to and we’re committed to, and we’re going to continue to try to do that,” Orr told reporters after three hours of morning meetings inside Snyder’s Capitol office. He later met with Bolger and other legislators, and has more meetings planned for Wednesday and next week.
“I’d like everyone to understand these transactions, deals and proposals have been very hard-fought with the help of the mediators,” Orr said. “We’d like to think what we’re proposing now is a very good outcome based upon very, very significant arms-length negotiations.”
The $350 million in state aid committed by the Republican governor and legislative leaders three months ago needs approval from the 148-member Legislature — no sure thing given election-year politics and distaste over “bailouts.” As many as a dozen bills could be introduced as early as next week.
While the exact timing of legislative action is unclear, Snyder has said the month of May is critical. The $350 million ultimately could come out to less if legislators pay it in a lump sum up front instead of spreading it out over 20 years.
Meanwhile, mediators announced a tentative deal between the city and some of its unions on a five-year collective bargaining contract. The city previously reached agreements with pension funds and a retiree group to reduce payouts.
Police and firefighters would see cost-of-living payments trimmed to about 1 percent. Other city retirees would get a 4.5 percent cut in their pension and elimination of the cost-of-living payment.
Roughly 30,000 retirees and city employees who qualify for a pension will get a ballot by mid-May to vote on the deals ahead of a summer trial on Orr’s plan to restructure the city’s debt.
If they don’t support the plan, hundreds of millions of dollars from foundations, philanthropists and the Detroit Institute of Arts would vanish and deeper pension cuts would become inevitable.
“It would be helpful if we could give the people who have the vote, the interested parties in the bankruptcy, an indication of the security and confidence that what we baked into the plan is actually going to happen,” Orr said.
After meeting with Orr, Rep. Fred Durhal Jr., D-Detroit, said there should be oversight of Detroit after it is no longer being run by a state-appointed emergency manager.
Other conditions legislators likely will insist upon before helping Detroit are ongoing independent reviews of the pension funds and protections for the state from future lawsuits from pensioners and creditors.
“It just makes good common sense to make sure that the city of Detroit does not go back where it came from,” Durhal said.
Bolger said he and Orr did not speak about unions contributing to the settlement.
Unions say their members already are making concessions, and Sen. Coleman Young II, D-Detroit, likened Bolger’s demand to “extortion.” Bolger reiterated that the unions should offer to add to the $816 million settlement.
“The state and those unions look at a long-term, protracted legal battle if this is not resolved,” he said. “They should take those reserves that they would otherwise spend on legal bills and put them to reduce the impact on their pensioners.”
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