The Canadian Press - ONLINE EDITION

Detroit workers, retirees set to vote on critical pension deal in city's historic bankruptcy

  • Print

DETROIT - The historic restructuring of Detroit through bankruptcy court is taking a crucial step by putting a key plan before the some of the people most affected: roughly 30,000 retirees and city employees.

Ballots have been sent to those who qualify for pensions and should be arriving by midweek, Bill Nowling, a spokesman for state-appointed emergency manager Kevyn Orr, said Monday. Detroit is proposing to cut pensions by 4.5 per cent and eliminate cost-of-living payments. Retired police officers and firefighters have a better deal that trims only cost-of-living payments.

While there are many moving parts to the restructuring, the pension agreement is viewed as a centerpiece. If the retirees and employees don't support the plan, hundreds of millions of dollars from foundations, philanthropists and the Detroit Institute of Arts would vanish and deeper pension cuts would become inevitable.

Creditors — not only retirees but also big banks and others — are voting on the plan, and ballots are due by July 11. That will be followed by a summer trial on Orr's plan to restructure the city's debt, and the ultimate step comes when Judge Steven Rhodes rules on the plan by the end of September.

Detroit filed for bankruptcy last July, citing $18 billion in unmanageable long-term liabilities. Orr's goal is to avoid a cram-down, a bankruptcy term that gives a judge sweeping power to settle disputes.

The employees and retirees now must decide if they can live with less — albeit more than the drastic reductions Orr initially proposed.

Under tentative agreements reached by negotiators, police and fire retirees would not lose pension benefits but their annual cost-of-living allowance would be trimmed to 1 per cent. Other city retirees would see a 4.5 per cent pension cut and the elimination of cost-of-living payments. There is a possibility of restoring some of that money if the health of the two pension funds improves.

The average annual pension for police and fire retirees now is $32,000, while most other retired city workers get $19,000 to $20,000.

The deal also hinges on whether state lawmakers approve legislation introduced last week to use about $195 million from Michigan's savings account to help shore up bankrupt Detroit's pension funds and prevent the sale of valuable city-owned art. The plan has backing from legislative leaders and Republican Gov. Rick Snyder, but its passage is no certainty in a bailout-averse, Republican-controlled Legislature.

For city retiree Donald Smith, 69, the uncertainty is worse than the cut he might face to his $889 per month pension.

"I'm still in limbo — I don't understand how we can vote without something concrete," said Smith, who worked for the city for 29 years including employment in parking enforcement and as a civilian for the police department. "At this point, I can't make an informed decision. If it was 4.5 per cent and everything was locked up. I'd probably be inclined to do it. ... It doesn't seem like a fair vote."

Tina Bassett, a spokeswoman for the general services pension fund, said officials are holding four informational meetings on two days next month, two of which will be streamed on the Internet. The goal, she said, is to provide as much information as possible to members, not campaign for passage.

She recognizes the vote at this point is "a leap of faith" that "the state money will be there," but added the plan includes language that could restore benefits if the pension funds keep making money.

"We're bringing them what we believe is the best possible deal we could attain," she said. "A lot of people have worked very hard, very long (and spent) so much time trying to make this work out."

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Stuart Murray announces musical RightsFest for CMHR opening weekend

View more like this

Photo Store Gallery

  • A monarch butterfly looks for nectar in Mexican sunflowers at Winnipeg's Assiniboine Park Monday afternoon-Monarch butterflys start their annual migration usually in late August with the first sign of frost- Standup photo– August 22, 2011   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Marc Gallant/Winnipeg Free Press. Local- Korea Veterans Association stained glass window at Deer Lodge Centre. Dedication with Minister of Veterans Affairs Dr. Rey Pagtakhan. March 12, 2003.

View More Gallery Photos

Poll

What should the city do with the 102-year-old Arlington Street bridge?

View Results

View Related Story

Ads by Google