Orr turns up the heat on Detroit pensioners; they push back

Apr 1, 2014

Retirees protest outside federal court in Detroit.
Retirees protest outside federal court in Detroit.
Credit Sarah Cwiek / Michigan Radio

Detroit pensioners are trying to turn up the heat on emergency manager Kevyn Orr Tuesday – just as he’s doing the same thing to them.

Protesters filled the street in front of Detroit’s federal courthouse on Tuesday to slam Orr’s proposed cuts to city pensions.

Orr filed a revised version of his bankruptcy restructuring plan there Monday. An earlier version, known formally as a plan of adjustment, was filed in February.

Orr is trying to pressure retirees into voting for that plan by threatening even deeper pension cuts if they don’t. He’s doubled down on that strategy in this revised plan.

He’s also proposed creating two new pension funds and trustee boards, further angering retirees.

Initially, Orr had proposed up to 6% cuts for police and fire retirees, and 26% cuts for non-uniform retirees – but only if retirees approve the plan of adjustment.

That would allow a proposed “grand bargain” to take effect, where private and state funds would kick in to minimize pension cuts while protecting the Detroit Institute of Arts assets.

The revised plan ups the stakes somewhat for uniform retirees, raising the maximum cuts to 14%. General system retirees could still lose up to 34%.

Tuesday’s protesters included many pensioners, who chanted “No pensions, no peace!” as they circled outside the courthouse.

Retired Detroit building inspector Steve Leggett wasn’t just mad at Orr. He said the state also has a constitutional obligation to protect his public pension.

“I did a hard job. I did a good job,” Leggett said. “And the fact is that we elected a governor to protect and preserve and enforce the constitution. And then he does this end run to stop taking care of his responsibilities, the state’s responsibilities … that’s just low.”

If retirees approve the plan of adjustment as a creditor class, they’ll automatically have to give up a lawsuit that challenges any public pension cuts are unconstitutional. Judge Steven Rhodes has ruled the state constitution can be overridden in federal bankruptcy court, but a retiree committee is appealing that.

City creditors now have until the end of this month to file objections to Orr’s plan.

Creditors will then have a chance to vote on it, with ballots due in late June. Judge Rhodes has set a crucial trial to decide whether it can be implemented for mid-July.