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Orr tells Michigan lawmakers: 'We need your money'

Published: Tuesday, May 13, 2014 12:51 p.m. CST
Caption
(AP Photo)
FILE--In this Oct. 12, 2006 file photo, Detroit's skyline is shown. The historic restructuring of Detroit through bankruptcy is taking a crucial step by putting its plan before the people most affected: roughly 30,000 retirees and city employees. Monday, May 12, 2014 was the deadline for ballots to have been sent to those who qualify for pensions, and should be arriving by mid-week. Detroit is proposing to cut pensions by 4.5 percent and eliminate cost-of-living payments. Retired police officers and firefighters have a better deal that trims only the cost-of-living payments.

LANSING, Mich. — Detroit's emergency manager asked lawmakers Tuesday to quickly approve nearly $195 million in state aid to help the bankrupt city emerge from insolvency, saying frankly, "we need your money" to ensure a compromise on pensions doesn't fall apart.

Kevyn Orr testified at the first of four House hearings on legislation that would authorize the lump-sum payment to match contributions from foundations and the Detroit Institute of Arts to prevent steep cuts in pensions and the sale of city-owned art.

A retiree with an average $20,000 annual pension could lose $8,000 if the Legislature does not follow through on the pledge by Gov. Rick Snyder to help settle largest public bankruptcy in U.S. history, he said.

"I don't want to go over the top and use hyperbole, but for some people it would be catastrophic," Orr said of the potential for significant pension reductions coupled with planned health care changes.

He told a special committee considering the 11-bill bankruptcy package — which also would provide for state oversight of Detroit for decades — that he is working under a tight timeline before the bankruptcy judge has a trial this summer and, he said, hopefully issues a decision in September.

"We have an ambitious schedule. We have what we think is a reasonable plan," Orr said. "But to put in bluntly, we need your money."

Two more hearings are planned this week and another next week, when the committee chairman, Republican Rep. John Walsh of Livonia, hopes to have a vote.

The plan has support from Snyder and generally from legislative leaders, but its passage is no sure bet in a bailout-averse, Republican-controlled Legislature where the House speaker is pushing unions to contribute to the pension and art rescue.

The legislation incorporates parts of the restructuring plan proposed by Orr but also adds extra conditions.

A seven-member commission that would include the governor and Detroit's mayor along with other state leaders and appointees would oversee the city's finances, budgets, debt issuance and revenue estimates for at least 20 years after Orr is gone.

The proposed commission is modeled after long-standing state oversight of New York City, which had a fiscal crisis in the 1970s.

Under questioning from Democratic Rep. Thomas Stallworth III of Detroit, Orr said he had heard from unions involved in negotiations over the $816 million pension and art deal that at least five provisions in the bills "may appear inconsistent with the plan."

"We're on the top of this, and we intend to make sure we engage in the appropriate dialogue to address those concerns," Orr said.

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