Detroit workers vote ‘yes’ on city’s debt plan
Public workers and retirees voted overwhelmingly to back pension cuts in Detroit, in a sign of support for the city’s attempts to restructure after filing for bankruptcy last year.
The voting results were released late Monday night and are being hailed as a victory for Detroit as it works to overcome $18 billion in long-term debts, the largest municipal debt in U.S. history. Detroit’s current and retired police and fire employees alongside civilian workers voted by margins of 82-18, and 73-27 respectively, to accept pension reductions while bondholders continue to oppose the plan.
Under the plan, proposed earlier this year, pension payments to general employees will be reduced by 4.5 percent and they will forfeit annual inflation adjustments. Retired Police and Fire employees will lose just a portion of their annual increases.
“I want to thank city retirees and active employees who voted for casting aside the rhetoric and making an informed, positive decision about their future and the future of the city,” said Detroit emergency manager Kevyn Orr in a statement Tuesday.
The successful vote activates an $816 million bailout from the state of Michigan. The money will help prevent the sale of artwork owned by the city as part of the Detroit Institute of Arts has been up for consideration since bankruptcy proceedings began. But for that to happen, a Judge still needs to agree that Detroit is now on the right path.
Judge Steven Rhodes will determine in court next month whether Detroit’s current strategy to reduce its debt is fair and reasonable to its creditors. The trial starts Aug. 14.