(Reuters) - A special Michigan House committee on Wednesday approved a nearly $195 million state contribution for a key element of Detroit's plan to adjust its $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history.
Legislation appropriating the money from Michigan's rainy day fund was part of an 11-bill package the committee approved and sent to the full House for consideration.
The mostly unanimous votes on the bills by the five-member bipartisan Committee on Detroit's Recovery and Michigan's Future marked the first by state lawmakers after Governor Rick Snyder included money for Detroit in the proposed budget he unveiled in February.
The legislation, which also creates an oversight commission for Detroit, must still pass the Republican-controlled House and Senate.
"We still have plenty of work to do," said Republican State Representative John Walsh, who chaired the committee. "Just because it moved from this committee doesn't mean it's a done deal."
The committee made numerous changes to the bills before voting, including giving the Detroit City Council an appointment to the oversight commission and removing a requirement to offer new city employees 401k retirement savings plans instead of pensions. The House could take up the bills as soon as Thursday, according to a spokesman for House Speaker Jase Bolger.
Americans for Prosperity-Michigan, a conservative group backed by billionaire industrialists Charles and David Koch, is revving up a campaign against using state money to help Detroit.
Under Detroit's debt adjustment plan, Michigan's lump sum payment would be added to $466 million pledged over 20 years by philanthropic foundations and the Detroit Institute of Arts to ease pension cuts on city retirees and protect art works from being sold to raise money to pay city creditors.
Also on Wednesday, the United Auto Workers union agreed to participate in the so-called grand bargain by raising "material contributions" for retired Detroit worker healthcare costs without tapping its own funds, according to U.S. Bankruptcy Court mediators.
On Monday, mediators announced the Michigan Building and Construction Trades Council will also contribute to retiree healthcare.
All of the contributions are contingent on each other and require affirmative votes from members of Detroit's two retirement systems on the debt adjustment plan. U.S. Bankruptcy Judge Steven Rhodes has set July 24 for the start of a hearing on the plan to determine if it is fair and feasible.
Apart from the bankruptcy plan, JPMorgan Chase & Co on Wednesday announced a $100 million, five-year commitment to spur the city's economic recovery.
(Reporting By Karen Pierog; Editing by Chris Reese and Tom Brown)