Unions to Fight Federal Judge’s Detroit Bankruptcy Ruling

DETROIT —Unions representing Detroit’s city workers, who will lose pay and pensions under a federal judge’s Dec. 3 bankruptcy ruling, vowed to fight the issue in higher courts.

And they made clear that one key point will be that financial czar Kevyn Orr, appointed by Gov. Rick Snyder, R-Mich., did not bargain in good faith with the unions, their pensioners and their workers in the run-up to the bankruptcy filing earlier this year – a point that even the federal judge who ruled for the bankruptcy acknowledged.

Nevertheless, U.S. District Judge Steven Rhodes gave Orr the go-ahead to create a reorganization plan for the city, which Orr claims is $18 billion in debt.  Rhodes also said retiree pensions are open to cuts despite a Michigan state constitutional guarantee against such slashes.

Snyder appointed Orr under a law the GOP-run state legislature approved earlier, letting the governor name such czars to run any “failing” local governments.  The czars, like Orr, have the power to tear up union contracts, slash pensions, fire workers and sell assets.  Snyder appointed such financial rulers for several other Michigan governments, all in majority-minority areas.

“The only thing we can do is challenge this ruling legally and question the morality of the pensions that have been earned by these workers,” said AFSCME President Lee Saunders, whose union represents most of the city’s remaining 9,500 workers.  In the months before the bankruptcy, retiring Mayor Dave Bing (D) had fired hundreds more.

“Pensions in Detroit average $19,000 a year.  There is a good possibility they will be reduced.  That is dead-ass wrong and morally corrupt,” Saunders said.  Teachers President Randi Weingarten and Fire Fighters President Harold Schaitberger agreed.

“While the court said it would not ‘casually or lightly exercise the power…to impair pensions,’ the emergency manager indicated otherwise,” Schaitberger said.

“There is a standing, promised threat by the city to end or violently curtail the health care and pension system that protect Detroit fire fighters – the same people who selflessly continue to rush into burning buildings to save lives even while the city threatens not to have their backs if they are injured or killed in the line of duty. And that fact continues to stress Detroit’s system of public safety and those who serve in it.

“Going forward, this is as much about politics and the priorities of public officials as it is about bankruptcy and the court.  Where elected officials continue to push for austerity no matter the cost to the lives of workers and public safety, this union will stand up and make sure the citizens understand the value proposition being offered by those politicians.”

Weingarten said the court is rewarding the city for not funding the workers’ pensions and rewarding Wall Street bankers who hold Detroit bonds, not workers.

“This is a dark day for the people of Detroit who worked hard, played by the rules and are now at risk of losing everything. If Detroit wants to rebuild a strong economy, it needs to prioritize its workers and middle class over the interests of Wall Street bankers.  Detroit’s bankruptcy was caused by predatory financial deals, a revenue crisis, massive job loss and Snyder’s decision to slash state aid,” she said.

“Employees contributed to their retirement plan every year, while the city failed to make its full payments.  Yet, the employees now stand to earn substantially less.  In the bankruptcy, the modest pensions of Detroit’s firefighters, police officers and other employees could be all but wiped out, even as Wall Street banks continue to extract hundreds of millions of dollars from the city’s economy…It’s unfair and unjust that public workers take a lion’s share of the hit, while Wall Street did the lion’s share of damage.”