The Free Press reports the Obama administration and state officials are discussing a deal that would free up an additional $100 million to soften the blow to Detroit pensioners.
Citing two people familiar with the talks, the paper explained the federal government would support a move by the state to give Detroit $100 million in federal money for blight remediation. That, in turn, would free up $100 million of the more than $500 million that emergency manager Kevyn Orr planned to spend for blight removal over the next 10 years. Orr could then use that money to reduce pension cuts.
The story, by Matt Helms, Stephen Henderson and Todd Spangler, touched on the risks inherent in such a deal:
The talks are fraught with political ramifications for both President Barack Obama and Michigan Gov. Rick Snyder.
Obama, not keen to set a precedent of the federal government sending money to cities or states with deep pension debts, has publicly said there’s no support for a bailout of bankrupt Detroit.
Snyder, meanwhile, might risk a backlash in an election year from Republicans and outstate voters if he outwardly appears to be supporting a shift of more resources to the city.
On Tuesday, groups representing city pensioners reached agreements that are considered keys to winding up Detroit's complicated bankruptcy case.
The Retired Detroit Police and Fire Fighters Association board unanimously approved the proposal from the city that calls for no cuts in pensions for retired cops and firefighters. The agreement does call for smaller annual cost-of-living increase.
Negotiators for Detroit pension boards representing civilian city retirees agreed to benefit cuts that were dramatically lower than initially proposed.
