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Michigan, White House Discuss Federal Money For Bankrupt Detroit: Report

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[April 16, 2014]  (Reuters)  Michigan officials and President Barack Obama's Administration are discussing a plan to free up $100 million in federal money to aid Detroit's retired city workers, the Detroit Free Press reported on Tuesday.

Citing two people familiar with the talks, the newspaper said the talks were centered around federal money flowing to Michigan for blight removal. Under the plan, $100 million would be earmarked for Detroit, reducing the $500 million the city's emergency manager, Kevyn Orr, plans to use to eliminate blight over the next 10 years.

The $100 million saved could then be used by Orr to ease pension cuts for retirees under the city's plan to adjust its $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history, according to the report.

A spokeswoman for Michigan Governor Rick Snyder declined to comment on the report. Orr's spokesman did not immediately respond to a request for comment. The Free Press said the White House would not comment late Tuesday.

Snyder has asked the state legislature to allocate $350 million in settlement money that the state receives for Detroit from U.S. tobacco companies over 20 years. That money along with funds pledged by philanthropic foundations and the Detroit Institute of Arts, would raise about $815 million for the city's retirees and eliminate the possibility of a fire sale of art works in the city's bankruptcy.

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Detroit's police and fire retirees would see no pension reduction under a deal reached announced by U.S. Bankruptcy Court mediators on Tuesday. That deal relies on the $815 million.

(Reporting by Karen Pierog; editing by Ken Wills)

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