Today, the House of Representatives passed a package of bills that are part of a settlement agreement in the bankruptcy process for the City of Detroit. This is a very important issue for Michigan taxpayers due to the economic and fiscal impact this bankruptcy has, and I feel it is important that I convey the realities of this issue and explain my vote on this package of bills. The Bankruptcy of Detroit is the largest municipal bankruptcy in the history of the United States. During the current bankruptcy process for the City, it has come to light that pensions for public employees are severely underfunded. Given the financial crisis the city is faced with, Governor Snyder has proposed to the legislature an appropriation of funds that will combine with funds provided by private foundations to help lessen the cuts to the Detroit pension system, and most importantly, protect all Michigan taxpayers. Since that time I have been contacted by many citizens in the 93rd District, many of whom shared my concerns about appropriating funds for this settlement. A package of bills has passed the House of Representatives that would appropriate $195 million towards this settlement. This money will be tied to strict oversight and requirements for the city to follow, including the oversight of future financial and pension decisions from commissions appointed by the State of Michigan. The city would also be required to provide retirement benefits capped at no more than 7% of an employees’ base pay and require employees to cover at least 20 percent of their healthcare premiums. These conditions mirror what many of our state employees have been asked to pay, as well as those in the private sector. This settlement would also go side by side with other cuts and requirements that come from the federal bankruptcy process. Pensioners from the city will also be required take a cut to their pensions even with the contribution from taxpayers and private foundations. Because the Michigan Constitution prohibits the reduction of public pensions, the Attorney General has brought a lawsuit to ensure that Detroit pensioners are made whole if a settlement cannot be reached. For this reason, it is possible that each Michigan citizen could be on the hook for the $3.5 billion shortfall, including the constituents of Clinton and Gratiot counties. This settlement, if agreed to by the retirees, would stop this lawsuit, and could potentially save each citizen in our great state $350 each. If this settlement is not reached and the pension lawsuit fails, taxpayers would still not be held harmless. Cuts to the pension system would force Detroit pensioners onto the States safety net resources, costing $275 Million over 20 years, in addition to $60 million-$100 million in legal fees. Let me be blunt about the math. With this settlement, each Michigan citizen can escape this bankruptcy for $19.50. Without this settlement, citizens will be charged anywhere from $35-$400 each. This is a consequence I simply cannot allow my constituents to suffer, and is ultimately why I supported this settlement. I have spent many weeks combing over this issue in detail. I had many concerns about the city going forward with this settlement. Please know I do not take lightly the appropriation of $195 million. However, my #1 priority is to protect the hardworking taxpayers of my district. As painful as this settlement is, it is the best alternative to do just that. Representative John Walsh chaired the committee on this settlement package. Below is a link to a recent interview with Representative Walsh. In this interview he discusses in great detail the financial situation in Detroit and the financial options that are available. Please take a moment to watch this video, and do not hesitate to contact me with any questions you may have. gophouse.org/representatives/southeast/walsh/ In sincere appreciation, Tom
Posted on: Thu, 22 May 2014 19:49:02 +0000
Recently Viewed Topics
© 2015