Detroit, lawmakers lay new foundation of cooperation

Chad Livengood and Gary Heinlein
Detroit News Lansing Bureau

Lansing

Detroit's financial crisis has forged a new working relationship between the city and suburban and rural lawmakers following years of distrust.

Legislators like Republican House Speaker Jase Bolger of Marshall, dealing with such issues as a potential fire sale of Detroit Institute of Arts masterpieces, were confronted with the city's profound problems in a more direct way than their predecessors.

When Bolger was elected to represent Calhoun County in the Michigan House of Representatives in 2008, his only interaction with Detroit was rooting for its sports teams.

"I don't think you could find any reference from me six years ago about Detroit," Bolger said recently.

But the situation began to change during the past two years as Bolger, the outgoing two-term House speaker, and other Republican legislative leaders had to wrestle with the financial turmoil of Michigan's biggest city.

In June, the GOP-run Legislature approved pouring $195 million of state tax dollars into Detroit's pension funds as part of a settlement to limit cuts to monthly pension checks for 32,000 past and present city workers and shield city-owned art from a sale to satisfy creditors.

It was a remarkable feat for a Legislature that has long had an icy relationship with Detroit, mainly because of corruption and mismanagement that came to define city leaders in the last decade.

"Almost everyone suspended traditional concern, opposition distrust and allowed these conversations to take place," said Rep. John Walsh, R-Livonia, who shepherded the "grand bargain" legislation through the House with the help of Rep. Thomas Stallworth III, D-Detroit.

Sen. Bert Johnson, D-Highland Park, said the bankruptcy proceedings can't help but benefit Detroit because lawmakers, state officials and residents of the city have had to focus for an extended period of time on the problems and best remedies.

"Front-page headlines for the past 2½ or three years have forced people to pay attention," Johnson said. "For the city and the people of Detroit, that can only be a good thing."

Lawmakers who have wanted to foster stability and growth for the city, but found it difficult, now have a focus, he said.

"I think you're going to see the city take a front seat in terms of legislative priorities next year," Johnson said.

Before the emergence of the grand bargain — the equivalent of $816 million over 20 years from the state, foundations, corporate donors and the United Auto Workers to aid pensioners — there was an air of uncertainty about what would transpire in Detroit's bankruptcy.

The city's storied art collection and the promised benefits for past and present city workers seemed endangered as Detroit Emergency Manager Kevyn Orr wrestled with paring down $18 billion in debts and long-term liabilities.

Orr was pushing for deep cuts to pensions and retiree health care, setting the stage for years of litigation that experts predicted could wind up before the U.S. Supreme Court.

"There was not only uncertainty more than a year ago, there was bleak outlook," Bolger said. "You didn't see a bright ending."

The emergence of a coalition of donors to buy the Detroit Institute of Arts' independence from the city and dedicate the money to pensioners began to change lawmakers' outlook.

In lobbying for state aid, Gov. Rick Snyder's administration made it clear the alternative to settling could involve years of costly litigation and leave the state exposed to paying for all unfunded pension obligations, which could have been as high as $3.5 billion, based on one estimate.

"It became clear that this was a good financial calculation for Michigan's taxpayers," Bolger said.

To get the $195 million approved, Republican leaders attached several strings: a minimum of three years of oversight of the city's finances by a new state-dominated board and an added layer of financial expertise within the city's two pension funds to make sure the state money was invested wisely.

Even as a bankruptcy strategy progressed, there were legislators who said "none of our money" should go toward helping Detroit, said ex-state Rep. Steve Tobocman, a Democrat who served in the state House from Detroit for six years ending in 2008.

While more experienced lawmakers understood the city's economic and cultural value to the state, Tobocman said, newcomers to the Legislature "weren't asked to understand the history of Detroit or its role in the economy of the state or to globalization."

But to legislative leaders who now understand that better, Orr's work in stabilizing finances and Duggan's outreach to lawmakers as mayor have changed the dynamics, he said.

"All of these kinds of things suggest there are different feelings today than when that other trend was going on," Tobocman said.

Senate Majority Leader Randy Richardville, R-Monroe, said there was never a political calculation discussed when GOP leaders decided to become a party to Detroit's bankruptcy settlement.

"The governor and people like myself did it because we have a responsibility to represent those people and didn't want that happening," Richardville said.

clivengood@detroitnews.com

(517) 371-3660

Twitter.com/ChadLivengood