Attorney Thomas H. Bleakley (P23892) filed a lawsuit (Helen Moore et al v. Rick Snyder, 16-000153-MM) in the Michigan Court of Claims on the 5th of July which alleges that the entire DPS bail out package’s passage was unconstitutional; the claim being it was in fact a collection of local acts according to the Michigan Constitution of 1963. Local acts require two-thirds legislative vote margins and voter approvals to become law. The six bills of the DPS bail out package were all passed, in both houses of the Michigan Legislature, under the more liberal 50% + 1 voting rule allowed only for general acts.
The Michigan Constitution of 1963, Article IV, Section 29 states “No local or special act shall take effect until approved two-thirds of the members elected to and serving in each house and by a majority of the electors voting thereon in the district affected….”. Article IV, Section 30 further states that “….two-thirds of the members elected to and serving in each house of the legislature shall be required for the appropriation of public money or property for local or private purposes.”.
A Bankruptcy Postponed Is Not A Bankruptcy Avoided
The $ 617 million PA 192 – 197 bail out package signed by Governor Snyder on 21 June (plus the $ 48.7 million emergency down payment earlier this year) will not fix the Detroit Public Schools. The culture of corruption and incompetence long fostered within DPS suggests that the new DPS – same as the old DPS, except for some liabilities – will fail miserably a few years hence in an avalanche of new liabilities. Michigan will then be left to sort out two separate DPS entities with unsustainable liabilities. This could easily occur even before Governor Snyder leaves office in 2019. Karma. Déjà vu all over again.
Replacement of Representative Plawecki on the Ballot Reveals Democratic Party Discord, Preparation for a Lame Duck Session?
During a week of dramatic racial conflict across the U.S.A, few noticed a more subdued racial conflict which surfaced right here in Michigan. First term Michigan State Representative Julie Plawecki died on June 25th during a hike on Misery Ridge at Smith Rock, Oregon. Representative Plawecki was running unopposed for reelection in the Democratic primary on August 2nd, in Michigan’s 11th State House District. Representative Plawecki’s death occurred after the April 19th Michigan primary election filing deadline, so it is up to the local party to select a replacement Democrat to appear on the November 8th ballot in accordance with PA 116 of 1954.
Half of the 11th Michigan House District’s population is in Garden City and Inkster, with the balance in attached pieces of Westland, Dearborn Heights and Livonia. Garden City and Inkster are polar opposites ethnically, but both vote heavily Democratic. The Westland and Dearborn Heights segments of the 11th are somewhere in between Garden City and Inkster, while the small segment of Livonia trends Republican. Hidden in the Census data for this district are substantial South Asian and Arab ethnic communities, but the district’s African-American population fraction is pretty well identified by the Census at about 35%.
There’s a story making the rounds here locally, that to put it mildly, I am more than a little surprised hasn’t been picked up by other media outlets around Michigan.
It seems that Emergency Manager Transition Manager Stephen Rhodes, Michigan Treasurer Nick Khouri, Gov. Snyder and a few select others within Michigan Government have felt that it is more important to bury some rather disturbing facts relating to Detroit Public Schools, rather than to make them public (Read:Better make sure that Michigan Taxpayers don’t EVER get wind of this!).
Nope, not the crumbling infrastructure of DPS.
And what is this little nugget you may ask?
H/T to the good people at Channel 7 in Detroit for breaking this story.
10x25MM has done a fine job pointing out the DPS foibles, and this morning reminds me that bankruptcy really was the legitimate option for the failed district. It appears that even after 617 Million has been approved, no one knows who is in charge yet. From the Detroit News:
Davis, who has been board president for two years, on Sunday said Lemmons was making his move.
“LaMar Lemmons is trying to hijack the ship, but he is not currently the president, even though he would like to be.”
Both insist they are following the June 9 board meeting results even though the stint is short..
Boys. boys… Just remember, the Captain goes down with the ship.
In any event, I mentioned election efforts, right? Below is a radio ad I have prepared to run this coming week, and then again closer to the election. I thought it might be of interest, and that THIS TOO might be of interest. Higher taxes.. Right?
Part II - The Eventual Cost of DPS Liabilities to Michigan Taxpayers and Detroit Schoolchildren
DPS has two types of formal debt: operating and capital. Operating debt is a conversion of present and past annual operating deficits into ‘long-term notes’ sold to the financial markets, as well as more immediate debts owed to the State of Michigan directly. DPS capital debt exists only in the form of bonds which were sold to financial markets to purchase and rehabilitate facilities. DPS’ formal bonds are identified by Series, which consists of the year issued and a letter suffix when different purpose bonds are issued in a single year. The financial markets apply a further identifier, CUSIP, which is a unique identifier of municipal bonds by series and their intended dates of redemption. All of the DPS debt sold to the financial markets has been enrolled in Public Act 92 of 2005, a program designed to reduce interest rates to local school districts in accordance with the 1963 Michigan Constitution’s Article IX, Section 16. Most DPS debt is effectively secured by a general obligation to pay, which requires Detroit taxpayers to increase taxes and reduce spending should financial difficulties repaying arise.
DPS pays off its capital debt in annual installments of both interest and principal, before it pays off (or adds to) its operating debt. Bond interest and principal payments are required by bond terms which – if ignored – would result in immediate default and bankruptcy. The exact contract terms of DPS debt sold to the financial markets are laid out in official statements which detail all the formal legal and financial features of the bonds. The official statement is essentially a contract between DPS and its bond purchasers.
DPS’ operating debt payments are somewhat more flexible than capital debt payments because only a portion of operating debt has been converted into formal bonds covered by statements; much of it is separately owed to the Michigan School Loan Revolving Fund. The SSLRF can best be thought of as a State sponsored credit card. School districts tap into it when they are short of cash, and pay off their balance when they are flush. Operating debt is only converted into formal bonds when Michigan school districts exceed their limits at the SSLRF. Those limits are not exact, and generally come into play when DPS goes through one of its periodic financial spasms.
There is scant precedence for school districts filing for bankruptcy, the Snyder administration found. In 1990, according to an administration letter to state Rep. Laura Cox, R-Livonia, the Richmond Unified School District in Northern California filed for bankruptcy because of $42.5 million in debt. The judge ruled the district could not be protected by the court in bankruptcy and ordered the state to provide the district with operating funds.
RTA Funding Could Buy All Their New Riders New Cars, And Pay For Their Fuel and Insurance To Boot!
The new Regional Transit Authority of Southeast Michigan is out today with their transportation master plan to soak taxpayers in Macomb, Oakland, Washtenaw, and Wayne Counties for another $ 3.3 billion in property taxes over a 20 year period.RTA CEO Michael Ford released the regional mass transit plan RTA will submit to voters on November 8th under PA 387 of 2012. A 1.2 mill property tax increase and $ 1.7 billion in new Federal & State subsidies will provide four new bus rapid transit lines, 11 cross county connector lines, one regional rail line, and some extended/intensified local service.
Let’s have some fun by subjecting the new RTA regional mass transit plan to some real, pre Common Core, mathematics.