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| Flickr CC via Ian Freimuth |
The City of Detroit filed for bankruptcy earlier this year after suffering from declining
population and tax revenues. The city is
struggling to pay the building debt it owes to public workers expecting pension
payments. Many cities in the United
States are facing similar pension crises, and the country is looking to Detroit
to see how the drama of a failing system is corrected.
After the bankruptcy was negotiated, a group under Council
25 of the American State, County and Municipal Employees, sued to block the
bankruptcy. The group claims that
employees were not counseled on the filing and that the city’s poor finances
are not the fault of workers.
The bankruptcy court judge, Steven Rhodes has to determine
if the city is eligible to declare bankruptcy, and then oversee plans on how
Detroit will get back on track financially.
The plans may conflict with Michigan’s Labor Union-friendly constitution
barring pension cuts. No one has laid
out specific details about how to go about cutting pensions, and public workers
are restless to know their fate.
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| Flickr CC via meltedplastic |
Attorneys representing Detroit are presenting arguments that
are likely to highlight the city’s struggle to keep street lights on or a
staffed police force. Administrators
have skipped payments to debtors.
Thirty-eight cities have declared bankruptcy since 2010.
Detroit is by far the largest that has ever filed. Jefferson County, Alabama and San Bernadino,
California are also actively seeking bankruptcy.
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