By: J. Ellsworth Summers and Scott St. Amand
On Tuesday, June 2, 2014, the Michigan state senate passed a number of important bills, all of which are aimed to help lift Detroit out of its $18 billion bankruptcy. Approval by Governor Rick Snyder is all but guaranteed, as he has been a vocal advocate for providing state money to Michigan’s largest city. The measures had been previously approved by the state house of representatives on May 22.
The speed at which the bills passed through the state house and senate illustrate the state’s commitment to have the so-called “Grand Bargain” in Detroit’s debt adjustment plan in place by the time that U.S. Bankruptcy Judge Steven Rhodes has set the first hearing (June 24) on Detroit’s debt adjustment plan to determine if it is fair and feasible.
Under the “Grand Bargain” Michigan will contribute nearly $195 million up front, while another $466 million pledged over 20 years by philanthropic foundations and the Detroit Institute of Arts, would be used to ease pension cuts for city retirees. As we mentioned in the previous post, the “Grand Bargain” would also protect city art works from being sold to raise money to pay creditors.