The plan, awaiting approval from a bankruptcy judge, includes cuts to pensions and creditors to drive down the $18bn (10.8bn) debt. Funds would also be devoted to demolishing abandoned city properties. The city initially filed for bankruptcy protection in July 2013. ‘Best path forward’ Analysis Beth McLeod Washington DC When Detroit was granted protection from its creditors in December, it marked the biggest public bankruptcy in American history. The road map for how to tackle it has been long awaited by city workers, pensioners and creditors. This plan proposes to reduce benefits for city employees. These cuts are not as deep as some feared, but will still be contested in the courts by those who face losses. On the other side are the city’s creditors, including Wall Street banks.
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Im outraged, Beasley said. We didnt cause this deficit in the budget and to expect us to take these cuts is not right. I hope it is reversed in the courts. Watch the video below to hear another take that of a woman whose husband began serving as a Detroit police officer in the 1960s. Niraj Chokshi reports for GovBeat, The Post’s state and local policy blog. Before that he had covered economic, budget, tax and transportation policy for National Journal, blogged at The Atlantic and reported on the business of the nation’s largest law firms in California for The Recorder.
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Im outraged, Beasley said. We didnt cause this deficit in the budget and to expect us to take these cuts is not right. I hope it is reversed in the courts. The proposed road map out of bankruptcy still faces weeks and months of negotiations in federal bankruptcy court. The talks could result in changes to the plan; under Chapter 9 of the bankruptcy code, Judge Steven Rhodes must get at least some of the creditors to agree to the terms he imposes. Whatever results from those negotiations could have profound implications for worker pensions in other distressed cities. Although public worker pensions are protected from cuts under the Michigan constitution, a December court ruling said that bankruptcy trumps those protections, leaving pensions vulnerable to be cut just like any other financial obligation. If that stands through appeals, public workers elsewhere could face a similar fate. As part of the plan of adjustment, the city is proposing to spend $1.5 billion over 10 years on capital improvements, blight removal and equipment and technology upgrades. Those changes are sorely needed in Detroit, where police response times are close to one hour and 40 percent of the street lights do not work. Officials said the investments in Detroits fractured infrastructure and broken services would result in an improved city that would have a chance to reverse the downward spiral that has seen more than a quarter of the population flee since 2000.
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Detroit’s bankruptcy follows decades of decay
In the 2000 census, Detroit’s population fell under 1 million as the exodus continued. Today, it’s about 700,000. DID THE AUTO INDUSTRY’S FALL DRAG DOWN DETROIT? It’s a big factor. The city is littered with abandoned factories built in the postwar boom years, most of which have multiple stories. As the Japanese auto invasion began cutting into Detroit’s sales, General Motors, Chrysler, Ford and hundreds of auto parts companies looked outside the city to build one-story plants that could handle modern assembly lines. With every downturn, more companies abandoned the city, leaving the hulking buildings to squatters. Detroit’s tax base continued to erode. By the time the auto industry melted down in 2009, only a few factories from GM and Chrysler were left.
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Detroit bankruptcy plan includes deep pension cuts
Snyder has said he supports the plan. But Orr said in a call with reporters Friday that he anticipated the state wouldn’t be the only impaired class to support it. The http://ift.tt/1hWSwFX next steps largely depend on how city employee unions decide to proceed. They filed a lawsuit in December after Rhodes ruled that the city was eligible for bankruptcy protection; the 6th Circuit Court of Appeals agreed Friday to hear that case, bypassing the district court. That could pave the way to an eventual Supreme Court hearing. But the $700 million from the state and foundations hinges on the unions reaching a settlement with the city and agreeing to drop all lawsuits. On Friday, Orr repeatedly emphasized his hope that all parties come to an agreement soon. The plan treats city employees much better than in other cities, he said. “Some other cities have walked away from retiree healthcare, we haven’t done that,” Orr said. “We’re probably paying more than we anticipated.” The plan also builds in motivation for unions to immediately drop their objections.
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