Detroit’s grand bargain still needs Lansing’s approval

April 16, 2014
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(source: Wikimedia Commons)

(source: Wikimedia Commons)

In this week’s Metro Times we took a look at the state legislature’s role in Detroit’s ongoing bankruptcy — in particular, how it must approve a $350 million pledge for the so-called “grand bargain” to remain intact. And, with last night’s announcement of a significant deal between the city and Detroit’s pension boards and retiree groups, the ball is Lansing’s court now.

The new deal, first reported by the Freep, would cut general employees monthly pension checks by 4.5 percent and eliminate their cost-of-living increases. Police and fire retirees would see no cuts to monthly checks, while their cost-of-living increases would be reduced from 2.25 percent to 1 percent.

Under the original offer, police and fire retirees cuts were as high as 14 percent, with general retirees as high as 34 percent, that is, if the groups rejected the “grand bargain,” an $816 million proposal funded by foundations, the state, and the DIA to shore up pensions.

The sweeter deal for pensions, though, it must be noted, entirely relies on the state legislature approving $350 million for Detroit’s bankruptcy.  And while this broke after Metro Times went to press, that was the focal point of this week’s News Hits column — so, it’s worth repeating: The city still needs Lansing to sign off on the deal.

Reading through the Freep and News stories last night, some may come away thinking that wasn’t the case.

The Freep buried this fact near the bottom of their story, as well as an additional story on the federal government’s potential $100 million pledge, while the News didn’t even mention it.

Perhaps it’s just us, but it’s significant to consider the pension boards have agreed to something that’s not a guarantee. The New York Times must’ve felt the same, as reporter Monica Davey mentions the need for Lansing’s approval higher up in her piece that ran today. Next City followed this morning with similar hesitation that we shared.

State lawmakers will break for recess at the end of May. That only gives Gov. Rick Snyder six weeks to push for the deal before the city enters the confirmation hearing for its “plan of adjustment,” Emergency Manager Kevyn Orr’s framework for a path forward, in mid-July.

Calls I made to Kevyn Orr’s office earlier this week asking the same daunting What If question weren’t returned.

That’s not to take away anything from the deal that was reached last night. It would be significant if Detroit pensioners manage to come away with last night’s proposal, especially considering how drastic the previous offer was. (Even though, as MT’s Jack Lessenberry points out today, the cuts to cost-of-living increases could actually hurt retirees more in the long run.)

But without the state’s approval, and the loss of the $816 million grand bargain, the city’s bankruptcy becomes a new ballgame.

The Associated Press summarized where things stand this afternoon in a nice-and-easy read, simply titled “Detroit still needs $350m from state lawmakers.”

Retired police and firefighters would see smaller cost-of-living payments. Other city retirees would see a 4.5 percent pension cut. The $816 million vanishes if retirees don’t vote in favor in the weeks ahead.

Republican House Speaker Jase Bolger says deals reached Tuesday are important. But he tells The Associated Press that persuading lawmakers to approve the money soon is difficult because of anti-Detroit sentiment in the Legislature.

Republicans control the House and Senate.

That’s more like it. This is now in the hands of Gov. Snyder and congressional leaders to make it happen. We seem to recall a governor who spent last summer having to tour the state to win support for expansion of our Medicaid program.

Actually, come to think of it, we seem to recall Snyder as someone who has struggled on a number of issues — matters that require someone apt to handle the politics of huge legislative efforts. (Jeff Wattrick at Deadline Detroit wrote about Snyder’s stumbles last summer.)

Basically, if this is the guy we’re relying on to usher through the state’s $350 million pledge on six weeks notice, we’d feel it’s probably best to exhibit some hesitation about Detroit’s grand bargain, at least, for now.