The article reports:
…it (the $100 Million) allows the city’s new managers to reshuffle more cash into the city employees’ pension funds, which were looted by city and union officials for several decades.
The stealth bailout was exposed by the Detroit Free Press, which said the $100 million would be taken from the so-called “Hardest Hit Fund.” That fund was created by the administration in 2010 to counter the disastrous implosion of the federally-inflated real estate bubble.
Evidently the “Hardest Hit Fund” had been drained over the years by unconventional practices, including the periodic payout of funds to employees in years when the funds’ value were boosted by Wall Street investments.
Keep in mind that the stock market has been in fairly good shape over the last few years due to the influx of money from quantitative easing. That should have kept the funds viable had they been handled properly.
The article further reports:
Detroit has been under Democratic control since the departure of Louis Miriani in 1962, when the city’s residents had the nation’s highest per capita income.
The city crashed in the 1970s, amid racial acrimony and incompetent management at the city’s vital auto plants.
Many other cities and states face severe pension difficulties. They’re led by Chicago and Los Angeles, where Democratic control has boosted the pensions of government employees.
Michigan’s Republican governor, Rick Snyder, has promised to send $350 million in state funds to the city.
It matters who runs your city. Part of the problem is unfunded liabilities (large pensions promised to union government employees). In order to get our cities and states under financial control, we need to make sure that the promises we make to our municipal and state employees are paid for at the time the promises are made. The federal government can print money–states and cities cannot.