Here’s the one thing certain about Detroit’s bankruptcy: You don’t want to play poker with Kevyn Orr.
The state-appointed emergency manager had everyone convinced city workers and retirees were facing a steep 26% cut in their pensions – a cut that would jump to 34% if they didn’t quickly approve the smaller amount.
The city was getting ready to mail them all ballots explaining the cuts and asking for their approval.
Then, voilà – yesterday, everything changed. Suddenly, negotiators came up with a deal whereby most pensions would be cut by less than 5%. Police and fire retirees pensions won’t be cut at all.
There seems little doubt that the 32,000 employees and retirees will approve this deal. Yet we need to remember two things. First of all, this is not final yet – not by a long shot.
Something else that’s still very uncertain has to happen first. The Michigan Legislature has to approve contributing $350 million to a fund designed to shore up the pensions and protect any of the work in the city-owned collections in the Detroit Institute of Arts from being possibly sold for the benefit of the creditors.