The state of Michigan will pony up $195 million toward Detroit's effort to get out of Chapter 9 bankruptcy protection by October.
On Tuesday, the Michigan Senate approved a package of bills supporting the restructuring of Detroit's debt, including the $195 million state contribution.
At a news conference on the same day, Michigan Gov. Rick Snyder said he will sign the bills, according to a webcast. Mr. Snyder originally proposed to the Legislature a $350 million state contribution, but the amount was reduced during bipartisan negotiations.
The $195 million contribution is a critical component of the “Grand Bargain,” a court-mediated agreement to raise funds from outside sources to reduce pension cuts originally proposed in the city's bankruptcy recovery plan. The funding plan also ensures that artwork held by the city-owned Detroit Institute of Arts cannot be sold to pay creditors.
In addition to the state contribution, 13 foundations agreed to contribute about $369.5 million and the DIA will contribute $100 million. The legislation also moves the art museum out of city ownership into a non-profit entity.
The restructuring plan still requires the approval of creditors, including 100,000 active and retired Detroit employees who are participants of the $2.8 billion Detroit General Retirement System and the $3.4 billion Detroit Police & Fire Retirement System.
At the news conference, Mr. Snyder urged pension participants to vote yes on the bankruptcy ballot, noting that “a protest vote is not helpful.”
Sherri Welch, a senior reporter at Pensions & Investments' sister publication Crain's Detroit Business, contributed to this story.