The federal judge who allowed Detroit to proceed into bankruptcy also upheld Michigan’s emergency manager law as part of the decision. U.S. Bankruptcy Judge Steven Rhodes said the law is constitutional, and Emergency Manager Kevyn Orr was legally named to run the city.
If Rhodes had ruled otherwise, the bankruptcy could have been derailed. The legal challenge said the state has no right to override the authority of local elected officials.
“The governor wouldn’t have signed it if he hadn’t thought it was constitutional, and he sees the benefit there in terms of helping the cities get back on their feet, turn around their finances, and get back on their feet,” says Dave Murray, a spokesman for Governor Rick Snyder.
In a written statement, the governor said the decision to allow the bankruptcy to go forward – and to put public employee pension benefits on the table – was the right one:
“Today, the federal court allowed Detroit to stay on the path toward a brighter future. A future where streetlights work and ambulances respond quickly. A future where crime and blight shrink, and where jobs and investments surge.
“Authorizing the emergency manager to seek federal bankruptcy protection was a difficult decision, but it was the last viable option to restore the city and provide Detroit’s 700,000 residents with the public services they need and deserve.
There are currently 15 cities and school districts in Michigan that are under emergency management or are being evaluated for possible takeovers. Three others are operating under consent agreements reached under the emergency manager law.
Union activist Robert Davis filed the challenge to the emergency manager law.
“I have the upmost respect for Judge Rhodes, but I respectfully disagree with his reasoning in regards to the constitiutionality of the emergency manager law,” said Davis. “I am very thankful that I belong to a fighting union that has already filed the necessary paperwork for an appeal in the Sixth Circuit (U.S.) Court of Appeals.”
Michigan Council 25 of AFSCME, which is Detroit’s largest public employee union, filed the appeal.
State Attorney General Bill Schuette says he is pleased the bankruptcy was approved, but was disappointed public employee pensions will be part of the discussions:
“I will continue to aggressively defend pensions and Article 9, Section 24 of the Michigan Constitution as this case proceeds to the confirmation stage of the bankruptcy process, at which time we can thoroughly review any plans for potential legal action involving pensions.
Schuette says he will not use legal action to slow the bankruptcy process, but could file a lawsuit to challenge part of a re-organization plan to reduces already-promised pension benefits.