State laws re: bankruptcy contribution

[BankruptcyGuy]

Here is [[finally) a decent article summarizing the state law package related to the "grand bargain" contribution.

http://www.freep.com/article/20140513/NEWS06/305130021/

I would guess that there would be several modifications of each of these along the way. If the votes aren't there now, new amendments will have to be added to get the votes. Your guess is as good as mine as to what those will be.

[compn]

whats the chance the legislature lets detroit go bankrupt ?

[corktownyuppie]

whats the chance the legislature lets detroit go bankrupt ?

What do you mean by this? Detroit is already in the middle of bankruptcy. It is bankrupt.

[compn]

oops, i meant, what is the chance that walsh r-livonia committee denies the 200-300mil payment to detroit's pensions?

[corktownyuppie]

oops, i meant, what is the chance that walsh r-livonia committee denies the 200-300mil payment to detroit's pensions?

Ah. Interesting question. Everything is speculation at this point, but here are my thoughts...

- I think Walsh and the committee will be in favor of making the state payment.

- Even Bolger r-marshall himself is in favor of the State settlement...if the unions make a donation toward the settlement as well.

- Public opinion statewide is well in favor of the state settlement, the public pressure against throwing away $700MM in private help and leaving pensioners with 40% cut is IMHO very strong.

- Lastly, the growing trend is that as more outstate legislators become more informed that this isn't a "bailout" in the traditional sense [[it's a settlement...and choosing not to settle brings great litigation risk), that this is an opportunity to create real reforms, and that pensioners are still taking a cut even with the settlement, make this easier to swallow.

- But, I think the GOP are going to add some hard-to-swallow strings. I also think Bolger's demand for Union aid resonates well with the GOP.

- And I think it will be a very close vote.

Lastly, I would not rule out the possibility that the whole deal falls through and that Snyder and the GOP get it approved during the lame duck period, which may mean that Orr might need to have his stay here extended by 4-6 months.

To conclude, I think it will happen. But the process will get ugly, messy, and there's gonna be some bruised egos along the way.

[Novine]

It either happens now or it never happens. There's nothing in the dynamics that's going to change between now and in the lame duck. Despite what the polling says, there seems to be very a lot of anti feelings outstate for a Detroit bailout so it wouldn't be a surprise if this goes down especially if there are anti-union provisions that drive away Democrats.

[corktownyuppie]

It either happens now or it never happens. There's nothing in the dynamics that's going to change between now and in the lame duck. Despite what the polling says, there seems to be very a lot of anti feelings outstate for a Detroit bailout so it wouldn't be a surprise if this goes down especially if there are anti-union provisions that drive away Democrats.

There are reports of GM, Chrysler, and Ford ponying up toward the "Grand Bargain". If they do, I think pressure on the Unions to make a donation will go up.

I'm not one leading the charge to get them on board, but at the same time, when everyone else and their brother is putting in, it is a little strange that that they're not taking some ownership over this.

I don't even hold unions solely responsible for this situation. But if we're all going to pitch in and help for the greater good, then let's *ALL* pitch in and help for the greater good.

[Novine]

Notice how Bolger has never attached a number to his demand? That's because it's for political posturing, not actual negotiation.

[Hermod]

Notice how Bolger has never attached a number to his demand? That's because it's for political posturing, not actual negotiation.

The union "contribution" he has in mind may just be on the part of the municipal unions to renegotiate existing contracts to alleviate the financial strain on Detroit rather than a cash contribution.

[coracle]

It's not a bailout or a settlement it's a cop-out - we are giving money to an entity that spends it's own money on building a new Hockey Arena complex while expecting others to save its Pensioners from sliding into poverty. It doesn't even want to borrow it; it just wants it. It stinks. The time to stop the trend is now before the bailout/settlement/cop-out becomes the "entitlement".

[corktownyuppie]

It's not a bailout or a settlement it's a cop-out - we are giving money to an entity that spends it's own money on building a new Hockey Arena complex while expecting others to save its Pensioners from sliding into poverty. It doesn't even want to borrow it; it just wants it. It stinks. The time to stop the trend is now before the bailout/settlement/cop-out becomes the "entitlement".

There's good cause to disagree with the Hockey Arena, but I feel compelled to emphasize that it's not City Money, and so none of the money that would come from the state would go toward the Downtown Development Authority.

[Novine]

Except for the city dollars that are diverted to the DDA.

[coracle]

There's good cause to disagree with the Hockey Arena, but I feel compelled to emphasize that it's not City Money, and so none of the money that would come from the state would go toward the Downtown Development Authority.

The Downtown Development Authority should divert it's Funds to the Detroit Pensioners then. They have far more responsibility for them than the State has [[which is none). And the DDA can then ask the State to give them the vital funds they need for their developments. Do you think cities and towns don't "raid" their allocated funds to pay for their pet projects? Pensions are not a Detroit pet project, only inasmuch as it eases money from soft sources more readily than DDA projects do.

[Gistok]

The Downtown Development Authority should divert it's Funds to the Detroit Pensioners then. They have far more responsibility for them than the State has [[which is none). And the DDA can then ask the State to give them the vital funds they need for their developments. Do you think cities and towns don't "raid" their allocated funds to pay for their pet projects? Pensions are not a Detroit pet project, only inasmuch as it eases money from soft sources more readily than DDA projects do.

Coracle... it defies logic trying to make sense out of this paragraph.... apparently you are unaware that by law tax increment funds are not legally usable for other purposes besides development....

[coracle]

Coracle... it defies logic trying to make sense out of this paragraph.... apparently you are unaware that by law tax increment funds are not legally usable for other purposes besides development....

You can change stupid laws when they stand in the way - ask Conyers.
Except for not paying Banks/Creditors/Investors/Bond holders what they owe them and extracting contributions/settlements [[for what?) out of State/Suburbs/DIA/Philanthropists, what is the DETROIT TAXPAYER'S CONTRIBUTION to its own Bankruptcy?
Bankruptcy isn't so bad if you don't have to liquidate any of your assets, don't have to pay your bills and somebody steps in and gives you the money to carry on as you were with promises of better to come. I might even do it a second time.

[ABetterDetroit]

A some threads just bring out the "haters" that really don't know what they are all talking about, but boy do they know how to hate.

[mwilbert]

You can change stupid laws when they stand in the way - ask Conyers.
Except for not paying Banks/Creditors/Investors/Bond holders what they owe them and extracting contributions/settlements [[for what?) out of State/Suburbs/DIA/Philanthropists, what is the DETROIT TAXPAYER'S CONTRIBUTION to its own Bankruptcy?
Bankruptcy isn't so bad if you don't have to liquidate any of your assets, don't have to pay your bills and somebody steps in and gives you the money to carry on as you were with promises of better to come. I might even do it a second time.

In Detroit's case, it is pretty much agreed that the taxpayers are already paying as much as it makes sense to ask them to pay. That is what they are contributing, and it is more than anyone else. But I don't think you are right about the "carry on as you were". The plan of adjustment is supposed to provide a blueprint for how the city will operate in a fiscally sound way in the future, and the bankruptcy judge is not supposed to approve it unless he thinks the plan is viable. It is pretty clear that will involve significant changes from what the city was doing before.

[coracle]

In Detroit's case, it is pretty much agreed that the taxpayers are already paying as much as it makes sense to ask them to pay. That is what they are contributing, and it is more than anyone else. But I don't think you are right about the "carry on as you were". The plan of adjustment is supposed to provide a blueprint for how the city will operate in a fiscally sound way in the future, and the bankruptcy judge is not supposed to approve it unless he thinks the plan is viable. It is pretty clear that will involve significant changes from what the city was doing before.

Everything you say makes good sense and in a perfect world everybody would come out of it with a "win" if a good plan of adjustment is conformed to. It's the couple of reference to "supposed"s in your note that strike wariness [[and weariness) in my thinking based on history; and maybe they are there because subconsciously it occurs to you also. I sincerely hope you are right and I'm wrong and it works out to everybody's advantage.

[mwilbert]

I don't think in this case we are really talking about right or wrong. There have already been changes and there will be more. Whether it is possible to make sufficient changes to reach fiscal stability in the context of the limited resources available to the city is unknown. My personal opinion is that if the city is run properly and some of the burden of past obligations is lifted, it can function reasonably with the resources available, but I could easily be wrong about that.

I don't think there is any way it can be to everyone's advantage though. The bankruptcy process is all about distributing pain in an equitable [[by some standard, anyway) way, but that doesn't make the pain go away.

[Wesley Mouch]

You can change stupid laws when they stand in the way - ask Conyers.
Except for not paying Banks/Creditors/Investors/Bond holders what they owe them and extracting contributions/settlements [[for what?) out of State/Suburbs/DIA/Philanthropists, what is the DETROIT TAXPAYER'S CONTRIBUTION to its own Bankruptcy?
Bankruptcy isn't so bad if you don't have to liquidate any of your assets, don't have to pay your bills and somebody steps in and gives you the money to carry on as you were with promises of better to come. I might even do it a second time.

I think its likely Detroit will stumble a couple times. Why not. If you believe many of the critics, the problem is a theft of democracy. Or was the evil bankers. Greedy businessmen. Republicans.

All of the above were contributors to financial crisis to be sure. But if you shift the blame to them, you absolve other contributors. And you absolve yourself.

I think the most likely result of Detroit's bankruptcy is to delay the real day of reckoning. Detroit may have been the worst combination of bad decisions piled on top of the 2007 economic collapse. But a lot of other cities and states are right behind us. Look at Illinois. Look at California.

When the rest of the country truly faces the fact that you can't pay an increasing number of pensioners an increasing benefit for an increasing lifespan, there will have to be some reorganization on a national level. It will look a lot like what Walker or Snyder have been doing. Changing the rules.

The past rules where the cost of government just keeps going up as leaders promise away the future, and unions use political power to optimize union revenue -- the can't go on forever. Some type of civil service with good pay and benefits and more flexibility will need to erupt.

[erikd]

You can change stupid laws when they stand in the way - ask Conyers.
Except for not paying Banks/Creditors/Investors/Bond holders what they owe them and extracting contributions/settlements [[for what?) out of State/Suburbs/DIA/Philanthropists, what is the DETROIT TAXPAYER'S CONTRIBUTION to its own Bankruptcy?
Bankruptcy isn't so bad if you don't have to liquidate any of your assets, don't have to pay your bills and somebody steps in and gives you the money to carry on as you were with promises of better to come. I might even do it a second time.

What is the Detroit taxpayers contribution to our bankruptcy?

Our contribution to the bankruptcy is the fact that we pay the highest property taxes, the highest income taxes, spend the most money on retiree/legacy costs, and receive the shittiest services and return on our tax dollars than anybody else in the state.
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Let's take at look at the facts here:

In 1960, the city of Detroit had 1,670,144 residents, 26,386 active employees, and 10,629 pensioners.

In 2012, the city of Detroit had 701,475 residents, 10,529 active employees, and 21,113 retirees.
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Between 1960 and 2012, the city of Detroit lost 58% of its population, cut its active workforce by 60%, and the number of city retirees increased by 199%.
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Given these facts, I don't see how Detroit taxpayers are failing to 'pay our bills', and are just 'extracting contributions and settlements from the state/suburbs/DIA.'

Accusing Detroit taxpayers of shirking our responsibilities and failing to pay are bills is not only offensive, it is flat out incorrect. The 40% of us who are still here in the city pay for way more than we receive, and in fact, we pay almost as much for the debt that was left to us by former Detroiters than we do on our current expenses.

I don't know why former Detroiters should be completely absolved of their responsibility to pay for the debts and legacy costs that they incurred in exchange for the services rendered while they lived in the city.

Metro Detroit is like a dinner party where 20 people ate and drank all night, then 12 people got up and walked out, stuck the last 8 people at the table with the bill, and then the dine-and-dashers were outraged when they were asked to kick in a few bucks the next day.

[Hermod]

Metro Detroit is like a dinner party where 20 people ate and drank all night, then 12 people got up and walked out, stuck the last 8 people at the table with the bill, and then the dine-and-dashers were outraged when they were asked to kick in a few bucks the next day.

No, it is like a dinner party where 20 people got together and the 20 paid for dinner and wine. Three of the twenty then asked five of theirs friends to drop by and the eight of them ran up a big bar bill and began acting crazy. Seventeen of the original twenty left in disgust. The original three and their five buddies then trashed the dining room and were outraged that the ones who left weren't contributing to the bar bill and the damages to the restaurant.

[coracle]

erikd - #21
You may pay the highest taxes but what has that got to do with anything? Do you want someone else to pay them for you as well as their own?
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You've certainly nailed the knack of producing Retirees.
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You haven't "lost" the 58% population.They decided they wanted to leave.They're paying taxes somewhere else.
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I was never at your Dinner Party so why should I pay ANY part of the your tab? Now you've taken over the Restaurant and persuaded your customers to leave you still want them to pay for what the staff eat. Isn't that like having your cake and eating it too? [[pun intended). In fact there are about 8,000,000 in Michigan that weren't at your party being lined up to pay for what they didn't eat.

[erikd]

No, it is like a dinner party where 20 people got together and the 20 paid for dinner and wine. Three of the twenty then asked five of theirs friends to drop by and the eight of them ran up a big bar bill and began acting crazy. Seventeen of the original twenty left in disgust. The original three and their five buddies then trashed the dining room and were outraged that the ones who left weren't contributing to the bar bill and the damages to the restaurant.

Do you realize that the financial crisis in Detroit was caused by the skyrocketing costs of retiree benefits, pensions, and debt service, much of which was incurred when the city had a much larger population and tax base?

Do you realize that Detroiters have been paying the highest taxes in the state for decades, while city services have been constantly reduced as the city spent more and more to pay for old debts?

I don't know where you get the idea that Detroit taxpayers are just living it up and shirking the bill, but that's not the reality. Every year that goes by, the city spends less on services, and more on benefits for retirees. Detroit now spends more money paying retirees than we do on current employees. Even if Detroit ceased all city services, and spent every single tax dollar on retiree benefits and legacy costs, the city would still have gone bankrupt in the near future.

Since you are so critical of us current Detroiters, and you think that we are just dodging our responsibilities and not paying our bills, I would like to hear your solution to our retiree debt obligations. Please tell me exactly how current Detroiters are supposed to support tens of thousands of retirees who were hired in the 1950s -1970s, did 30 years and out, and were promised lifetime pensions and health care. We have cut the city workforce by the same percentage as our population has declined, but we can never cut enough expenses to pay for all those promises that were also agreed to by a million of our former neighbors, who later decided to walk away, and now seem to feel that they have no responsibility to honor their agreements just because they moved across 8 Mile.

I would also like to know why you feel that current Detroiters, especially those of us who were born after these obligations were made and the precedents were set, are solely responsible for the debts incurred by a previous generation, most of whom [[60% since 1960) just walked away from their obligations and left it for someone else to deal with.

[mwilbert]

No, it is like a dinner party where 20 people got together and the 20 paid for dinner and wine. Three of the twenty then asked five of theirs friends to drop by and the eight of them ran up a big bar bill and began acting crazy. Seventeen of the original twenty left in disgust. The original three and their five buddies then trashed the dining room and were outraged that the ones who left weren't contributing to the bar bill and the damages to the restaurant.

Even in your story, which bears little resemblance to what happened in Detroit, the original seventeen still owe some money here. I don't think anyone is suggesting that the original seventeen would owe the entire bill, or even an equal share. But they can't claim they don't owe anything.