budget surplus, no state bailout in works for Detroit, says top lawmaker
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[January 16, 2014]
DETROIT (Reuters) — Despite
forecasts that Michigan will have a budget surplus, a top state
legislator on Wednesday warned that Detroit should not expect a state
bailout for the struggling city that has filed the largest municipal
bankruptcy in U.S. history.
Michigan House Speaker Jase Bolger, a Republican, wants much of
the extra money to go toward tax cuts, according to spokesman Ari
"A direct bailout for the city by the state is not an option Speaker
Bolger will consider, but many other options exist that deserve to
be explored," Adler said in an email. "It's still too early to say
what, if any, legislative action would be needed."
Bolger has spoken with U.S. District Judge Gerald Rosen, the chief
mediator in the bankruptcy, Michigan Republican Governor Rick Snyder
and others about "the best way to resolve Detroit's bankruptcy in a
way that saves the state money and alleviates future financial
liabilities," Adler said.
Bolger is not part of the ongoing mediation talks in the Detroit
bankruptcy case, Adler added.
State Senate Majority Leader Randy Richardville, a Republican, met
with Rosen before Christmas and has not spoken with him since then,
Richardville's spokeswoman Amber McCann said in an email.
Detroit filed for bankruptcy in July 2013 and says it has more than
$18 billion in debt. Michigan will have an extra $971 million in
revenue for its fiscal 2015 budget, according to local media
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The next development in Detroit's bankruptcy case may take place on
Thursday when U.S. Bankruptcy Judge Steven Rhodes is scheduled to
rule on whether to approve a termination payment to end costly
interest-rate swap agreements.
The city and UBS AG and Merrill Lynch Capital Services, a division
of Bank of America, agreed to end the swaps, for $165 million, a 43
percent discount. The judge is also scheduled to rule on a request
by the city to borrow $285 million from Barclays Plc to pay the
swaps termination fee
(Reporting by Joseph Lichterman)
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