Policy: Labor

First signs of a Detroit recovery?

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Beltway Confidential,Opinion,Sean Higgins,Labor,Detroit,Entitlements,Michigan,Budgets and Deficits,Detroit Bankruptcy,Pensions

On Monday, Detroit is expected to release the results of a vote by the state's retirees on an accepting a "grand bargain" bailout package from Michigan. If accepted, it would be a significant step forward for the city towards returning to a solid financial footing.

The plan would reduce the city's debt by an estimated $7 billion in part by cutting back on pension payments, with money then redirected back towards basic city services. Approval by the stakeholders was needed, though the retirees didn't have any good options. If the deal is rejected, the city, which is under receivership of the state government, could act to reduce pension liabilities on its own.

Leaked early reports indicate that it will be accepted. A strong majority of police and firefighter pensioners have reportedly backed the deal, according to the Detroit Free Press. Support was not as strong among other public employee retirees, but still appears to lean towards approval. The newspaper cited "people familiar with the voting results."

The vote was concluded Friday, but tabulation isn't expect to be completed until next week, a city official said Tuesday.

Detroit entered into bankruptcy last year and is being overseen by a state-appointed emergency manager, Kevyn Orr.

The city is turning the corner on a lot of these financial issues, said J. Scott Moody, chief executive officer of the nonprofit think tank State Budget Solutions. "As the [reorganization process] plays out, that's going to free up resources to provide for basic services. More importantly, that will help the private sector to re-engage."

He pointed to a joint effort by the Detroit Police Department, the Michigan Department of Corrections and the nonprofit Manhattan Institute in the northwest part of the city that drove down home invasions by 26 percent. That crime reduction is making it possible for grassroots activists and the private sector to return to the neighborhoods. That in turn is helping to spur efforts to boost economic development through sponsoring individual start-up business by groups like New Economy Initiative.

SBS and the Manhattan Institute are hosting a pair of panels in Detroit Thursday and Friday on the subject. The events will include Detroit Police Chief James Craig and City Council member James Tate, among other civic and business leaders, to discuss this and related efforts to revive the city.

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