Michigan Gov. Rick Snyder on Wednesday proposed investing $350 million over 20 years as part of a broader settlement in the Detroit bankruptcy case to protect the pensions of city retirees as well as the city-owned art collection at the Detroit Institute of Arts.
The settlement should go to retirees, and require independent management of pensions, he said at a news conference announcing the plan.
"The answer to our long-term situation is a thriving Detroit .... That's going to help every corner of Michigan," he said.
The settlement would be funded by tobacco settlement funds or a similar source, not tax revenue, Snyder said.
The announcement follows word last week that a group of private foundations has pledged more than $330 million to rescue the city.
With Detroit sinking under more than $18 billion of debt and liabilities, its state-appointed emergency manager Kevyn Orr filed the biggest Chapter 9 municipal bankruptcy in U.S. history in July.
Snyder had privately gauged support among lawmakers last week for the plan — and he's facing politically tricky terrain.
Some Michigan legislators are worried that state financial assistance to Detroit could set a precedent if other cities collapse, while others have their own spending priorities elsewhere in the state. Election-year politicking also could come into play.
Mediators between the city and its creditors said in a statement that they hoped Snyder's announcement would help the parties reach as many agreements as possible that can be included in a plan to take Detroit out of bankruptcy.
"The mediators acknowledge that the question of state participation will now move to the legislative process, and urge that all parties approach the issue with an open mind," they said.
-The Associated Press contributed to this report.