Detroit News: State funds for Detroit pension-DIA deal likely to come with strings

LANSING – One of the key elements of the proposed plan of adjustment to resolve the Detroit bankruptcy, made public Friday, is the so-called grand bargain designed to protect Detroit pensioners and the artwork of the Detroit Institute of Arts.
But a separate – and perhaps no less grand – bargain may be required in Lansing to get the Legislature to sign off on a $350-million state commitment over 20 years that is one of the cornerstones of the deal.
The good news for Gov. Rick Snyder and others who support the plan is that very few lawmakers say they reject out of hand approving the money, which would likely come from Michigan's share of a 1998 legal settlement paid by tobacco companies.
The bad news is that the strings some lawmakers want to tie to the money in return for their support are already many and varied: Some lawmakers want a regional water authority in Detroit, others want to make the DIA a statewide institution, some want the management of the city's pension boards to change, while still others want to make sure local governments other than Detroit share equally in any Lansing largesse.
"Things could get really silly, really quickly – you could get all kinds of things tacked on," said Jeff Williams, CEO of Public Sector Consultants in Lansing. In the House, "we'll have to see how the nose count goes with a clean bill, and what do you have to add to it to get to 56 (votes)."
The state's proposed $350-million commitment is part of a bigger deal brokered by Chief U.S. District Judge Gerald Rosen under which foundations and the DIA would pledge another combined $465 million to bolster city pensions while preventing a sell-off of DIA artwork.
Tom Shields, a political consultant with the Republican firm Marketing Resource Group in Lansing, said Snyder may be able to cobble together enough votes from Democrats, term-limited Republicans and moderate GOP members – but it won't be easy.
"People want to see Detroit do well; they just don't want to pay for it," he said. "That will be a tough vote for anybody running for re-election, especially for Republicans and suburban Democrats."
Rep. Phil Cavanagh, D-Redford Township, said: "I hope legislators see the value in approving this money. My worry is that there's going to be strings."
Snyder has defied the odds before, selling the Republican-controlled Legislature on a pension tax in 2011 and expansion of Medicaid under the Affordable Care Act last year.
But he has also had some notable failures: road funding, auto insurance reform, and legislation to expand and codify the Education Achievement Authority.
The governor may have to dip deep into his well of "relentless positive action" to push through the bankruptcy plan.
So far, Snyder has stressed that the money would be part of an overall settlement of litigation that is potentially problematic for the whole state. And he has emphasized that it would be conditional on the settlement being a final one in which unions, retirees and others would drop their objections.
Williams said those talking points address two of the deal's biggest obstacles: Anything that smacks of a Detroit bailout is trouble, as is any suggestion that the money might just be one piece of an ongoing financial commitment, he said.
State Rep. Wayne Schmidt, R-Traverse City, said he's hearing more from constituents who oppose any financial help for Detroit than from supportive Detroit pensioners who have moved to northern Michigan.
"They tell me, `If we bail out Detroit, who are we bailing out next?' " Schmidt said. "I am not leaning any one way, other than to say many more constituents are saying don't do it."
Both Snyder and Senate Majority Leader Randy Richardville said last week they expect the state's contribution to be dealt with outside the regular budget process, in part, to get it done quicker. Work on the budget isn't expected to be completed until early June.
Richardville, R-Monroe, said he knows it's going to touchy.
"But I would actually say it's progressed quite a bit," Richardville said. " I have a caucus that's been very fiscally responsible. How do we make sure that if we agree to this that the same kind of problem doesn't exist in the future? That's the major question they're asking."
Rep. John Walsh, R-Livonia, said he's leaning very heavily toward supporting the state help for Detroit and that most of the members of the Republican caucus still have an open mind about the deal.
"We're going to need to understand what amount of money is going to be involved, how it's going to be paid and, most importantly, what assurances do we have that it will be spent in a manner that's appropriate?" he said.
Walsh said he also is thinking holistically – that it's better to help pensioners now than push them onto public assistance.
Rep. Michael McCready, R-Bloomfield Hills, said he supports the funding as a way of settling the bankruptcy issue and putting it behind Detroit and Michigan once and for all. In fact, he said he would prefer to make the payment in a lump sum, rather than spread it over 20 years.
And Sen. Mike Kowall, R-White Lake Township, who was born in Detroit, said he is leaning toward supporting the funding plan because he thinks it will help not only Detroit, but Oakland County.
"It's a real hard sell for some of the members in other parts of the state," Kowall said. "But the majority of us in Oakland County have more at stake at making sure Detroit succeeds.
"There are such good things on the horizon for Detroit, we just have to get beyond decades of not paying attention."