LANSING – Gov. Rick Snyder and Republican legislative leaders announced a proposal to allocate up to $350 million throughout 20 years to Detroit’s unfunded pension obligations.
“This is not a bailout of dollars for Detroit’s debt, this is not a bailout of banks and other creditors,” Snyder said. “This is focused in on helping reduce and mitigate the impact on retirees.”
Moving the city forward was the refrain echoed by Snyder, Bolger and Marshall. They said the proposal was “the right offer,” and “the right thing to do.”
If drafted into legislation and enacted, the funds would still be a drop in the bucket of Detroit’s pension woes. According to Detroit’s Emergency Manger Kevyn Orr, the city’s unfunded pension liabilities amount to $3.5 billion.
One of the city’s assets that has received a considerable amount of attention is the Detroit Institute of Arts. The artwork inside, valued in the billions of dollars, was facing an uncertain future until a consortium of foundations announced last week that they would pledge $330 million towards Detroit pensions in order to help ensure art is not sold off.
Snyder said the offer was presented with the condition that the museum become a protected asset and referred to the pledge as “truly admirable.”
Although no formal plans have yet been made, the governor’s recommendation was met with cautious optimism on both sides of the aisle. But Bolger acknowledged drumming up support for the proposal would not be easy. He framed the proposal as necessary assistance for a struggling city that is essential to the rest of that state.
“If (Detroit) were to fail, it would drag Michigan’s recovery with it and potentially burden taxpayers with Detroit’s liability,” Bolger said.
Richardville spoke about the proposal more reservedly, but said he thought the proposal was “something that’s very positive.”
“All we’ve agreed to is to take a hard look at it, to vet it publicly and to make sure we are very thorough,” Richardville said.
Snyder suggested the money could come in part from a 1998 settlement with major tobacco companies that brings the state hundreds of millions of dollars each year.
He also said his administration’s executive budget recommendation to be released in coming weeks will account for the proposal.
Rep. Thomas Stallworth III, D-Detroit, said the proposal is a “great first step.” Stallworth is an MSU alumnus, and one of his children is attending the university.
“What it should do is give people hope,” Stallworth said.