Plan to burn DPS debt with tobacco revenue?

State senator’s plan would burn DPS debt with tobacco revenue

http://bridgemi.com/2016/02/state-se...bacco-revenue/

From article:

A Detroit-area state senator said he is working on legislation that could use tobacco revenue as a funding source to tackle Detroit Public Schools’ massive operating debt, similar to a budget proposal Gov. Rick Snyder introduced last week.

Sen. Hoon-Yung Hopgood, D-Taylor, said he initially considered using state tobacco tax revenue in a bill he is drafting to pay for an overhaul of the district that would split it in two to pay an estimated $515 million in debt.

....DPS pays about $50 million a year in debt service.

Its $515 million in debt has accumulated from long-term bonds, short-term borrowing to improve cash flow, unpaid payments into the state pension system and late payments to vendors, Khouri said.

“Bankruptcy is a terrible option for the district,” he wrote. “The bankruptcy process is always uncertain, but in the end, it will cost the state more than double the cost of the proposed legislation.”

Bankruptcy could disrupt the district for eight months to a year and cost $75 million to $100 million in fees, he wrote.

Snyder’s plan would use $720 million over 10 years from the state’s tobacco settlement to pay for the plan, which would split DPS into two districts.....................