"Lifting Michigan’s largest city out of its financial crisis now depends heavily on decisions made by state lawmakers and suburban officials."
That's the stark assessment by the Detroit News in an unsigned editorial Friday. For decades, the relationship between Detroit and those two groups of officials has been rancorous and riven by racial politics.
But bankruptcy has created a situation in which the legislature and leaders of Wayne, Oakland and Macomb counties are destined to play key roles. Many of the key players are Republicans; the News' editorial page is closely aligned with the GOP, so the paper's plea will be heard, if not heeded, in the corridors of power.
As the News explains, a key to settling the case remains the so-called grand bargain, in which the state, a consortium of philanthropic foundations and Detroit Institute of Arts donors have pledged to contribute $816 million to the city’s pension funds in exchange for freeing the DIA artworks from creditor claims.
The challenge:
Asking lawmakers for $17 million annually was always going to be a tough sell; asking them to approve $350 million all at once may prove more daunting. The money likely will have to be raised through a bond sale. That means the Legislature will have to prioritize Detroit’s needs over other initiatives, including fixing the state’s highway system.
Some lawmakers will find that a difficult decision to explain to voters in an election year. And yet it is essential they approve the funding. For one thing, a timely conclusion of the bankruptcy is in the best interests of the entire state. If things turn south and the case becomes a prolonged legal battle, it will hurt the ability of governments across the state to raise funds in the bond markets. And it will also be a continued drag on Michigan’s image as it works to attract business investment.
Similarly, Chief Judge Gerald Rosen of the federal district court also has invited suburban leaders to participate in mediation sessions aimed at forming a regional water authority to take over the Detroit Water and Sewerage Department.
Emergency Manager Kevyn Orr hopes to offload the water system to Oakland, Wayne and Macomb counties to create an ongoing revenue stream for the city. The suburbs have complained they have not been given enough information to gauge the merits of the proposal. Surely the mediators can assess and resolve this complaint.
Mediation should provide the answers the suburbs seek.
