The latest news out of Detroit isn’t good. To get its fresh start, this once great but now bankrupt city is going to stick it to municipal employees and retirees.
City retirees there haven’t enjoyed exactly lavish pensions, but what they had was thought to be secure, protected under the state’s Constitution. That was until this week, when a federal judge ruled that guarantee void.
This has bad implications for Detroit, and for public employees everywhere.
Federal judge Steven W. Rhodes ruled that federal law trumps Michigan’s constitutional protection for public pensions. That means that pensions that were promised to more than 21,000 Detroit workers — fire and police, trash haulers, water and street crews — can now be considered as part of the unsecured debt of the city.
To put it in human terms, the public librarian who worked 30 years checking out books, helping countless youngsters learn to read, might see her pension slashed. That might mean this fixed income retiree won’t be able to pay her mortgage or heating bill each month.
According to Detroit Free Press, general city retirees receive about $19,000 in average pension benefits. Police and fire former employees get about $32,000, but they are also not eligible for Social Security benefits as part of their pension agreements.
Those are not astronomical payouts. Raise your hand if you think that’s too much to live on in your retirement.
The danger is that this approach will be presented as inevitable when cities and states finally have to clean up the messes of past poor governance. If the decision is upheld, the way has been greased for other cities to follow suit.
And because it’s Detroit, too few people will heed the alarm. After all, Detroiters are used to doing with less, right? Only a third of the city’s ambulances are operating, and 40 percent of its street lights. It takes police an hour to respond to “priority one” 911 calls, and large sections of Detroit, with its 78,000 blighted and abandoned properties, resemble a sparsely inhabited war zone.
Detroit is everybody’s favorite byword for urban malaise, but don’t think this is limited to the Motor City. Other municipalities and states have anxiously awaited Rhodes’ ruling on Detroit’s pensions because they have similar or even worse pension shortfalls. There’s even an ominous shorthand term pundits and editorialists now use: The Pension Crisis.Click here for reuse options!
Copyright 2013 The National Memo