State may be pressured to aid Detroit pensions in bankruptcy

Mediation may lead to state supporting pension plans

By Mara MacDonald - Reporter
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State government in Lansing may be face pressure to backfill Detroit city pensions that face cuts under the city's bankruptcy.

The state of Michigan may be asked to play  a key role in the city of Detroit's bankruptcy case.

While federal bankruptcy Judge Steven Rhodes ruled federal bankruptcy law trumps Michigan's constitutional protection of pensions, he also made it clear the state needs to provide aid to the city.

Governor Rick Snyder and top level state officials like Senate Majority Leader Randy Richardville have met with Federal Judge Gerald Rosen, who is serving as mediator in the bankruptcy case.

There is talk in Lansing that the state may be asked to backfill the Detroit pension plans with state dollars.  If a vote was taken today in the legislature, political consultant Dennis Darnoi said it would fail.

"You probably have two solid yes votes, and that would be Jase Bolger and Randy Richardville. Outside of those two in the legislature, no, there aren't votes for that," Darnoi said.

Even if the bankruptcy court makes it clear the state must play a role, the votes may still not be there in the legislature, where the Detroit bankruptcy is seen as Detroit's problem.

It is clear there will be no federal money coming to the rescue.  So, if state leaders see a need to backfill city pensions or provide money to sell the Detroit Institute of Arts to a non-profit organization, Dennis Darnoi says either move would be an extremely hard sell with lawmakers.

"There is definitely not an easy path or a simple path. It's a very difficult and nuanced issue that is going to take a lot of effort," Darnoi said.

Pressure is mounting, as the city and emergency manager Kevyn Orr plan to submit a budget and debt-cutting plan to the bankruptcy court by mid-January.

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