Saving the motor city.

Winter, Mary

Michigan lawmakers appropriated $194.8 million in June to help rebuild the engine of the state's largest city and former world auto capital. The move was hailed as an 11th-hour save for Detroit, which filed for bankruptcy last year amid plant closures, high unemployment and huge pension liabilities. The money is expected to help prevent steep cuts in pensioners' payments and save Detroit's world-class art collection, valued at up to $4.6 billion. Some had suggested the city sell off the collection, which includes works by Van Gogh, Rembrandt and Matisse, to help cover Detroit's estimated $18 billion debt.

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The state funds along with promised donations from several foundations and the Detroit Institute of Arts are expected to total $816 million. The Ford Motor Company, General Motors and Chrysler committed a combined $26 million to help save the art collection. I

Tens of thousands of retirees and city workers approved the deal, although a court must still sign off on it. The plan, dubbed The Grand Bargain, calls for a 4.5 percent pension cut and no cost-of-living increases; the city said cuts would be as high as 26 percent without the deal. As part of the plan, workers agreed not to sue the state for their full pensions.

The Associated Press reported the up-front payment of $194.8 million will come from the state's savings account and will be repaid with annual $17.5 million withdrawals from Michigan's tobacco settlement fund over 20 years.

Lawmakers believe the bailout will help the city avoid a drawn-out bankruptcy and the potential for city retirees to fall into poverty, which could cost the state an estimated $270 million in social safety net costs over 20 years, according to AP.