|
Detroit
retirees
back
pension
cuts by
a
landslide
DETROIT
- A year
after
filing
for
bankruptcy,
Detroit
is
building
momentum
to get
out,
especially
after
workers
and
retirees
voted in
favor of
major
pension
changes
just a
few
weeks
before a
judge
holds a
crucial
trial
that
could
end the
largest
public
filing
in U.S.
history.
Pension
cuts
were
approved
in a
landslide,
according
to
results
filed
shortly
before
midnight
Monday.
The
tally
from 60
days of
voting
gives
the city
a boost
as Judge
Steven
Rhodes
determines
whether
Detroit's
overall
strategy
to
eliminate
or
reduce
$18
billion
in
long-term
debt is
fair and
feasible
to all
creditors.
Trial
starts
Aug. 14.
"I want
to thank
city
retirees
and
active
employees
who
voted
for
casting
aside
the
rhetoric
and
making
an
informed,
positive
decision
about
their
future
and the
future
of the
city,"
said
Kevyn
Orr, the
state-appointed
emergency
manager
who has
been
handling
Detroit's
finances
since
March
2013.
General
retirees
would
get a
4.5
percent
pension
cut and
lose
annual
inflation
adjustments.
They
accepted
the
changes
with 73
percent
of
ballots
in
favor.
Retired
police
officers
and
firefighters
would
lose
only a
portion
of their
annual
cost-of-living
raise.
Eighty-two
percent
in that
class
voted
"yes."
Voting
ended
July 11,
and the
counting
was done
by a
private
company.
Support
for the
pension
changes
triggers
an
extraordinary
$816
million
bailout
from the
state of
Michigan,
foundations
and the
Detroit
Institute
of Arts.
The
money
would
prevent
the sale
of
city-owned
art and
avoid
deeper
pension
cuts.
The
judge,
however,
still
must
agree.
Anthony
Sabino,
a
bankruptcy
expert
who
teaches
business
law at
St.
John's
University
in New
York,
said
results
of the
voting
are a
big win
for the
city.
"It will
pave the
way for
a
confirmation
hearing.
Detroit
will be
able to
move
forward,
not with
absolute
financial
certainty
but far
more
than
Detroit
has
enjoyed
in
decades,"
he said.
Indeed,
a
Boston-based
restructuring
expert
hired to
advise
the
judge
said
Monday
Detroit's
overall
bankruptcy
plan is
"feasible,"
a key
standard
at the
upcoming
trial.
But
Marti
Kopacz
warned
that
antiquated
computer
systems,
a pledge
to spend
more
than $1
billion
to
improve
services
after
bankruptcy
and a
"cultural
malady"
among
workers
all will
be
challenges.
"There
are ...
employees
who
don't
grasp
that
their
job is
to
provide
a
service
to the
taxpayers
versus
the
taxpayers
owing
them a
job,"
Kopacz
said in
a report
released
Monday.
There
are tens
of
thousands
of
creditors
in
Detroit's
bankruptcy,
from
bond
holders
to
businesses
that
provide
soap,
but much
of the
focus of
the last
year has
been on
the
roughly
32,000
retirees
and
current
and
former
workers
banking
on a
pension.
They
have put
a real
and
often
anguished
face on
the
process.
The
judge
set
aside a
day last
week to
hear the
personal
stories
of
retirees
frightened
about
getting
smaller
checks.
The
average
annual
pension
for
police
and fire
retirees
is
$32,000,
while
most
other
retired
city
workers
get
$19,000
to
$20,000.
Orr has
said
pension
changes
are
unfortunate
but
necessary
because
two
funds
are
underfunded
by
billions.
If
investment
performance
improves
in the
years
ahead,
he said,
the cuts
could be
restored.
Many
retiree
organizations
had
urged a
"yes"
vote,
insisting
the
pension
changes
were the
best
option
under
tough
circumstances.
But
Dorothy
Baker,
64,
disagreed.
Besides
the
pension
cut, the
library
retiree
who
lives in
suburban
St.
Clair
Shores
would
lose a
portion
of her
annuity
earnings.
"Don't
they
sell
assets
in
bankruptcy?
They
haven't
sold any
assets.
There
are
parking
garages
and golf
courses,"
said
Baker,
who
worked
for
Detroit
for
nearly
39
years.
The
Michigan
Constitution
says
public
pensions
can't be
cut, but
Rhodes
said in
December
that
federal
bankruptcy
law
trumps
that
shield.
It was a
groundbreaking
opinion
that
could
influence
local
governments
across
the
country
that go
broke.
Michigan
Attorney
General
Bill
Schuette
believes
the
judge is
wrong,
but he
won't
appeal
now that
retirees
have
voted
for the
cuts.
"I will
respect
their
decision,"
Schuette
said in
a
statement. |