Detroit bankruptcy decision puts pensions at risk

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City truck mechanic Mark Clark, 53, said he may look for another job after absorbing pay cuts and higher health care costs. Now a smaller pension looms.

“Most of us didn’t have too much faith in the court. … The working class is becoming the have-nots,” Clark said outside the courthouse. “I’m broke up and beat up. I’m going to pray a whole lot.”

Marcia Ingram, a retired clerical worker, said she may need to find work but added: “How many folks are going to hire a 60-year-old woman?”

The judge spoke for more than an hour in a packed courtroom, reciting Detroit’s proud history as the diverse, hard-working Motor City devoted to auto manufacturing. But he then tallied a list of warts: double-digit unemployment, catastrophic debt deals, thousands of vacant homes and wave after wave of population loss.

Behind closed doors, mediators have been meeting with Orr’s team and creditors for weeks to explore possible settlements. The judge has told the city to come up with a plan by March 1 to exit bankruptcy. Orr has said he would like to have one ready weeks earlier.

The city is so desperate for money that it may consider peddling masterpieces from the Detroit Institute of Arts and selling a water department that serves much of southeastern Michigan. In a report Wednesday, New York auction house Christie’s pegged the value of city-purchased art at $452 million to $866 million. It’s just a fraction of what the museum holds.

The American Federation of State, County and Municipal Employees, which represents half of city workers, vowed to appeal Rhodes‘ decision.

Orr’s team got “absolutely everything,” attorney Sharon Levine told reporters, adding: “It’s a huge loss for the city of Detroit.”

Orr, a bankruptcy expert, was appointed in March under a Michigan law that allows a governor to send a manager to distressed cities, townships or school districts. A manager has extraordinary powers to reshape local finances without interference from elected officials. By July, Orr and Gov. Rick Snyder decided bankruptcy was Detroit’s best option.

Detroit, a manufacturing hub that offered well-paying, blue-collar jobs, peaked at 1.8 million residents in 1950 but has lost more than a million people since then.

Former hospital executive Mike Duggan takes over as mayor in January, the third mayor since Kwame Kilpatrick quit in a scandal in 2008 and the first white mayor in largely black Detroit since the 1970s.

Orr is in charge at least through next fall, although he’s expected to give Duggan more of a role at City Hall than the current mayor, Dave Bing, who has little influence in daily operations.

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Associated Press writer Corey Williams contributed to this story.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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