Michigan Attorney General Bill Schuette says he thinks the U.S. Supreme Court will eventually have to decide whether Detroit’s public employee pensions are protected from bankruptcy.
Schuette is challenging a federal judge’s decision that cutting pension benefits is on the table as part of the bankruptcy.
“This is a case that lots of states and cities and counties are watching carefully, and it’s a case of first impression and it really is a battle between what governs? A state constitution like Michigan or Illinois has one that’s similar, or the federal supremacy clause, the federal bankruptcy clause?” says Schuette.
The judge says federal bankruptcy law preempts pension protections in the state constitution.
Schuette says the question is a new one and of wide interest.
“I’m going to very aggressively represent and defend our constitution, and, in the end, the Supreme Court will say, will make a ruling and that will be the final decision,” says Schuette.
Schuette says the dispute should not delay the rest of the bankruptcy, and puts pressure on the city and its creditors to come up with a plan that does not affect pensions.
Detroit’s emergency manager says there’s more than $9 billion in unfunded pension and retiree healthcare liabilities.