Issue Position: Protecting Michigan and Helping Detroit Rebuild for a Brighter Future

Issue Position

The Michigan House came together recently and passed a legislative package that will help Detroit get back on its feet but more importantly will protect the state as a whole. The plan would settle Detroit's bankruptcy for pennies on the dollar and provide taxpayers the accountability and oversight they deserve for the investment of their hard-earned tax dollars.

The fundamental provisions of the plan are sound: allocate money from the Rainy Day Fund; protect taxpayers from future uncertainty and larger liabilities; and in return require oversight and protections against future failings should the city revert back to its old ways. The plan allocates $194.8 million from the state's Rainy Day Fund to the pensioners - not the city. The state would establish a new commission that will oversee contracts, budgets and collective bargaining agreements for decades. This
plan would act as settlement for the bankruptcy and would allow the city and the state to move forward.

The cost of default? As a state we have already spent $36 million in legal fees and future liabilities could be as much as $275 million in state assistance. This would be for things such as food stamps and assistance, because many retirees financially were set to receive pensions in lieu of other forms of retirement. Plus, Michigan taxpayers constitutionally must fund more than $2 billion in long term liabilities for Detroit pensioners. It makes fiscal sense to protect the pensioners now and protect Michigan taxpayers as we move into the future.

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