May 30 (Bloomberg) -- The lead role of Michigan Republicans in solving Detroit’s record bankruptcy is dispelling decades of suburban antipathy and may validate Governor Rick Snyder’s gamble of asking his party to help the insolvent city.
The state Senate is set to give final approval as early as next week to a $195 million payment to lessen harm to pensioners and protect the city’s art collection from a sale to pay creditors. The Republican-led House on May 22 approved the money with lopsided votes. After passing the 11-bill package, House members from both parties stood and applauded one another.
“In the seven years I’ve been in the House of Representatives, I’ve never seen that happen,” said Fred Durhal, a Detroit Democrat. “To see that bipartisan statesmanship, I was so touched by what I saw.”
The vote flies against a national headwind of legislative gridlock, the threat of Tea Party retribution and the explicit opposition of a group funded by the billionaire Koch brothers. It promotes the reputation of Snyder, a 56-year-old former venture capitalist in his first term, as a practical politician not driven by partisanship.
“We had good diversity in terms of parts of the state that you wouldn’t normally see rallying to support Detroit,” Snyder said about the House vote during an interview. “There’s been a much more positive dialogue in the past several years. This could be more a milestone.”
The state money is part of an $816 million pledge from Snyder, foundations and Detroit’s art museum to help settle the $18 billion bankruptcy.
The legislation would create a nine-member commission to monitor Detroit’s finances after it emerges from bankruptcy, similar to the control board that watched over New York City after its near-bankruptcy in 1975. The Detroit Institute of Arts would be converted to a new nonprofit museum, which would shield a collection that includes masterpieces by van Gogh, Picasso and Rembrandt.
Snyder initially proposed giving Detroit $350 million over 20 years. The legislation was “like a nuclear bomb” when introduced, angering Republicans and Democrats alike, Durhal said, but it was modified through bipartisan discussions.
The House finally approved a $195 million lump sum. The money would be replenished by funds from a court settlement with tobacco companies. The deal received two-thirds supermajorities in the 110-member body.
“People just looked at the circumstances,” said Representative John Walsh, 52, a suburban Republican who led a special committee that approved the plan. “I don’t care what happened in the past. It doesn’t matter. It’s bankrupt. It’s broken. Let’s figure it out what’s the best way to approach this.”
The breakthrough came despite a difficult history in the former U.S. auto-making capital, the state’s biggest city at about 700,000 residents. Detroit leaders chafed at a promise of more annual state aid that was broken in the 1990s. They denounced a 2011 emergency manager law that Snyder pushed, winning him more power over distressed cities and school districts.
White suburban politicians have a long history of Detroit-bashing to drum up votes. Coleman Young, the city’s first black mayor, who served from 1974 to 1993, often retaliated with a sharp tongue.
Many Republicans have viewed heavily Democratic Detroit as a tax-eating den of poverty and corruption whose former mayor, Kwame Kilpatrick, was convicted of graft in 2010.
“There’s some antagonism toward Detroit, but there is also pretty strong recognition of the importance of the city to the state,” said Jeff Guilfoyle, vice president at Lansing-based Public Sector Consultants, a policy research firm. “I talk to people in Grand Rapids and Oakland County, and everybody gets that for Michigan to be really strong, we need Detroit to do well.”
Snyder, who last year appointed Kevyn Orr as the city’s emergency manager and then signed off on the bankruptcy filing, said he was warned that giving money to Detroit was risky for Republicans in an election year.
“That’s not been a big issue in my book,” Snyder said. “I try to do the right thing. There are a lot of facts to support the settlement in terms of cost of litigation, social safety-net savings.”
While Congress is mired in bickering and investigations, Michigan’s push to help Detroit is a glimmer of cooperation -- one opposed by Americans for Prosperity, a group funded by Charles and David Koch to advance free-market ideas and oppose Democrats. Its Michigan chapter is planning an election-year campaign against lawmakers who voted for the deal.
“The Senate hasn’t even voted and the mayor of Detroit is looking for another billion-and-a-half dollars from foundations and government,” said Scott Hagerstrom, director of the organization’s Michigan chapter, referring to a campaign to raise more money for blight removal in the city. “You have political leadership in Detroit that just doesn’t get it, engages in the same behavior that got them in the position they’re in.”
Yet an April poll showed two-thirds of likely voters supported Snyder’s offer. And Walsh said the margin of House support may encourage the Senate, where Republican majority leader Randy Richardville has been a supporter.
“That does send a really big message,” Walsh said.
States have ultimate responsibility for cities, said Richard Ravitch, former New York lieutenant governor advising U.S. Bankruptcy Judge Steven Rhodes on Detroit’s case. Ravitch was instrumental in New York City’s turnaround in the 1970s.
He said Michigan didn’t do enough to keep Detroit from collapsing, such as curbing its borrowing.
“The state could have stopped that a long time ago,” Ravitch said.
Republican Representative Al Pscholka voted for the aid on behalf of a district 180 miles (290 kilometers) west -- a place he said has more Chicago Bears football fans than those of the Detroit Lions.
Pscholka said he toured Detroit twice in the past year and came away with a better understanding of what it faces.
“This was a vote of courage and one of love,” Pscholka said in an interview. “This will give Detroit an opportunity to right the ship and gives us the opportunity to protect taxpayers.
‘‘When you explain it to people, they actually thank you.’’
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