For nearly a year, the largest municipal bankruptcy in U.S. history has played out in a federal court in Detroit. During most of that time, the two biggest questions have been: Will the Detroit Institute of Arts (DIA), one of the nation’s great museums, survive unscathed? And will the city’s 32,000 pensioners be left with enough of what they worked for to protect them from financial devastation?
Kevyn Orr, Detroit’s state-appointed emergency manager, and city unions have reached a proposed deal. Under the agreement, most pensioners would take a 4.5 percent cut in a stipend that averages about $19,000 a year and would give up future cost-of-living payments.
This seemed to pave the way for a final settlement of Detroit’s bankruptcy case. But one huge obstacle blocks a better future: The Michigan Legislature.
Saving the pensions and art museum depends on a “grand bargain” that involves an infusion of $866 million into the city’s undercapitalized pension funds. Private foundations have pledged more than $400 million and supporters of the DIA another $100 million.
Now all that remains is for state lawmakers to approve a one-time payment of $350 million. But while Republican Gov. Rick Snyder strongly supports this move, many lawmakers in his party do not. They see Detroit as a place that has brought its troubles on itself and has nothing to do with them; they feel they owe the city and its retirees nothing.
Michigan House Speaker Jase Bolger is demanding that city unions put up cash before he will let his body vote on the bargain. Even if that was a proper demand — which it is not — failing to support the grand bargain would be an extremely shortsighted move that will hurt all of Michigan, not just Detroit.
There is more than enough blame to go around for Detroit’s problems, from crooked politicians to lawmakers who failed to deliver on promised revenue-sharing payments. What matters now is fixing the problems and ensuring the city’s and the state’s future.
Governor Snyder is not from Detroit and will never win many votes there. But he is a shrewd businessman who realizes that Michigan will never truly come back as long as its major city is a national synonym for failure.
Detroit needs a chance to start over with a clean slate. Michigan needs its largest city to be fiscally healthy, or at least functional, even more.