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Detroit Bankruptcy Scheme Moves Forward, AFSCME Will Fight for Working People

by Cynthia McCabe  |  July 24, 2013

Detroit Bankruptcy Scheme Moves Forward, AFSCME Will Fight for Working People Next Wavers protest Emergency Manager's pension slashing agenda in downtown Detroit (photo by Khalid Naji-Allah)

In Detroit today, a federal bankruptcy court judge let stand an earlier state court ruling that Michigan Gov. Rick Snyder violated the state constitution by filing for bankruptcy and threatening the pensions of 20,000 workers in the city. But the judge did allow the bankruptcy to move forward in federal bankruptcy court for now.

“This bankruptcy not only tramples on the Michigan legal process but sets the stage for a destructive and damaging proceeding that will only serve to drive Detroit into further peril,” AFSCME Pres. Lee Saunders said. “The fight is not over and we will continue to stand up for Detroit’s workers every step of the way.”

Last week, Snyder authorized his appointed Emergency Financial Manager Kevyn Orr to file for bankruptcy, an act that a state judge almost immediately deemed in violation of the state constitution’s pension protections. But now the action will proceed in federal bankruptcy court, and the next action on the case is expected Aug. 2.

Eager to push the bankruptcy through, outsource the city’s public infrastructure, and target retirees’ hard-earned pensions, Snyder and Orr are misleading the public about the actual cause of the economic crisis in Detroit. Non-uniformed workers of Detroit – 70 percent of whom are represented by AFSCME (along with another roughly 40 percent of retirees who are AFSCME members) – had their pension benefits reduced by approximately 40 percent since 2012. The average pension is $19,000 per year. Workers have taken a 10-percent pay cut during the past fiscal year. And the pension contribution to the General Retirement System is only 4 percent of the total revenue Detroit receives.

Orr publicly claimed he “bent over backwards” to work with constituencies in Detroit. Not true. Despite many requests, Orr has refused to meet with AFSCME leadership. As recently as three weeks ago, Orr refused AFSCME’s request to meet to discuss pensions and health benefits for retirees. Just two weeks ago, his representatives assured AFSCME that there were “months” to address these issues.

It is estimated that the bankruptcy will cost Detroit more than $100 million in professional fees, including massive fees paid to Orr's former law firm.

Detroit saw its share of state revenues slashed by $66 million from 2011 to 2012 by his hand. In total, state aid to Detroit has been cut by $160 million from 2002.

“The fight does not end here,” AFSCME Council 25 Pres. Al Garrett said. “We will never stop fighting for Detroit and its workers.  Snyder and Orr are not above the law.  Their scheme to use bankruptcy to seize employees' and retirees' life savings has to be stopped. 

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