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Detroit's emergency manager submits plan to bankruptcy court

Feb. 21, 2014 at 7:51 PM   |   Comments

DETROIT, Feb. 21 (UPI) -- The plan offered by Detroit's emergency manager Friday to return the city to solvency includes cutting retired city workers' pensions by a third.

While monthly checks for retirees generally would be cut by as much as 34 percent, retired police officers and firefighters would be hit with a 10 percent cut, the Detroit News reported.

Emergency Manager Kevyn Orr dangled a carrot in front of the retirees, the Detroit Free Press said, offering a 26 percent cut -- 4 percent for police and firefighter pensions -- if pensioners accept an $815 million contribution to the municipal retirement funds from the state, foundations and private donors.

"Without a negotiated solution, these funds are at risk," Orr told reporters in a conference call.

Al Garrett, leader of the city's largest union, the American Federation of State, County and Municipal Employees Council 25, called it "a gut punch" to city workers and retirees.

A committee representing Detroit retirees said taking the deal would put a fifth of the city's 23,500 into poverty in the next 10 years, the News said.

Detroit, saddled with $18 billion in debt, last summer became the largest U.S. city to file for federal bankruptcy.

Orr's plan proposes a decade-long strategy to spruce up the city, and invest in technology and capital improvements. It would pay holders of nearly $375 million in unlimited tax general obligation bonds 20 percent of what they're owed, the News said.

Orr's plan would preclude the sale of masterpieces in the Detroit Institute of Arts' to generate cash and renegotiate $11.5 billion in unsecured claims.

He said time is of the essence.

"We must move swiftly to emerge from bankruptcy so that the financial distress harming the city can end," Orr said in a statement. "We maintain that the plan provides the best path forward for all parties to resolve their respective issues and for Detroit to become once again a city in which people want to invest, live and work."

Michigan Gov. Rick Snyder urged all parties to work toward a resolution, saying "Detroit's comeback is under way," the New York Times reported.

"The state's focus is on protecting and minimizing the impact on retirees -- especially those on fixed, limited incomes -- restoring and improving essential services for all 700,000 Detroit residents, and building a foundation for the city's long-term financial stability and economic growth," he said.

The plan is subject to the approval of U.S. Bankruptcy Judge Steven Rhodes.

Topics: Rick Snyder
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