What it might look like if Detroit's bankruptcy is thrown out

[BankruptcyGuy]

Courtesy of our neighbors to the west.

http://www.chicagobusiness.com/artic...95H2332578C6F#

[MikeyinBrooklyn]

Too bitter and awful to even contemplate. Detroit has proven beyond a reasonable doubt that there is no scenario in which it can even come close to paying it's debts [[let alone ongoing services) without the bankruptcy intervention. Conceivably, the judge might tweak the end results, but he can't possibly determine that Detroit isn't eligible for bankruptcy. He might as well rule that water isn't wet.

[MikeyinBrooklyn]

Chicago and Illinois have recalcitrant denialistic public sector unions that only harm their members in the long run by not compromising. When they end up in bankruptcy- and without reform they very surely will- federal bankruptcy management of state and municipal debt will supercede state laws "guaranteeing" public sector pensions. No matter what the law says, money will not magically appear in the coffers to pay off the unions. There will be court ordered layoffs and pension cuts. It would behoove them to get ahead of it, and manage the cuts and changes in future pension structure. But they won't, so their members will go through what Detroit union members are going through.

[erikd]

At the end of the day, it doesn't really matter if the Detroit bankruptcy is thrown out or approved, because there simply isn't enough money to pay off all of the debt.

This isn't some kind of showdown where the first one to blink is the loser.

The city of Detroit simply can not pay off all of the debt. It doesn't matter what the bankruptcy court says, and it doesn't matter what the state constitution says, because words on a page don't pay the bills. If the city doesn't have enough money to make ends meet, then some of the bills just won't get paid.

It doesn't matter what people have been promised, because there is no possible way that all of those promises can be met.

Shit in one hand and wish in the other, and see which one fills up first...

[sumas]

We must live in a blessed neighborhood or city workers still live here. EMS awesome, firefighters true heroes and police response excellent. New street lights installed too. This is a mostly poor neighborhood. So no clue why we get such great attention but I never question why we are so lucky. We do have a strong association and not afraid to report crime etc which may have something to do with it. Police in particular appreciate good reporting and fearless citizens that help them do their jobs and make arrests stick.

Bankruptcy is no looming issue since neighborhoods have been largely ignored.

[sumas]

I guess I should say I am pro union. Solvency or not it shouldn't come down to broken promises to retirees and contracts negated.

[Dan Wesson]

Thread title and content of article don't jive. Looks like a public sector union and pension issue.

I have always been ambivalent towards public sector unions because they don't face the same conditions of success or failure the private sector unions do. To me they are the fat on the union movement body.

Unlike the private sector where the battle is being lost by globalization and the race to the bottom, the public sector unions are using the same tactics they organized to protect themselves from. The political forum and courts.

Their problem is organic, the host is dying.

[renf]

Am I correct in thinking that in Detroit and in many Michigan municipalities, obligations for
OPEB are greater - sometime much greater - than obligations for pensions? So far as I
know, no one has argued that the Michigan constitution protects OPEB. Kevyn Orr apperas
to be funding about 10% of the city's OPEB debts if I understand his current plan. Does that
establish a model for all of the other financially challenged municipalities and school districts in Michigan?

[Honky Tonk]

At the end of the day, it doesn't really matter if the Detroit bankruptcy is thrown out or approved, because there simply isn't enough money to pay off all of the debt.

This isn't some kind of showdown where the first one to blink is the loser.

The city of Detroit simply can not pay off all of the debt. It doesn't matter what the bankruptcy court says, and it doesn't matter what the state constitution says, because words on a page don't pay the bills. If the city doesn't have enough money to make ends meet, then some of the bills just won't get paid.

It doesn't matter what people have been promised, because there is no possible way that all of those promises can be met.

Shit in one hand and wish in the other, and see which one fills up first...

They're still after the Holy Grail, the artwork. Once that's gone, and all debts paid, vendors will probably be including collateral clauses before signing contracts. If we don't get paid within such and such a timeline, we get Belle Isle.

[BankruptcyGuy]

Thread title and content of article don't jive. Looks like a public sector union and pension issue.

I have always been ambivalent towards public sector unions because they don't face the same conditions of success or failure the private sector unions do. To me they are the fat on the union movement body.

Unlike the private sector where the battle is being lost by globalization and the race to the bottom, the public sector unions are using the same tactics they organized to protect themselves from. The political forum and courts.

Their problem is organic, the host is dying.

Illinois has the same constitutional provision as Michigan, but our courts have interpreted it a different way. If the Sixth Circuit court of appeals finds that Judge Rhodes is wrong, the whole deal is out the window.

[MikeyinBrooklyn]

I guess I should say I am pro union. Solvency or not it shouldn't come down to broken promises to retirees and contracts negated.

I don't confuse workers with unions. I feel terrible when someone has their pay or pensions slashed. But duly elected municipal union leadership has known for decades [[as have their cohorts in public office) that the city couldn't meet the long-term obligations they were making. They agreed to them anyway because they look better [[and get reelected and make more money) in the short run. Detroit's inability to meet it's obligations is no surprise to anyone, including municipal employees. Union leadership did to their membership what the council and mayors did to the citizens: screwed them over, fully aware and okay with it. They were just hoping the bomb would go off when someone else was holding it. I am pro-worker; sadly, the municipal unions are not.

Erikd, it does matter if the bankruptcy is approved or not. You're right, there isn't any possible way for Detroit to pay the bills without it. But without it, there will be endless lawsuits to recover money [[and forced sales of city property), and the few remaining city services will have to be cut further to pay off old bills. A well managed bankruptcy will allow for an orderly partial repayment of debt, current services to be kept, and stability in both Detroit's financial and political systems.

[Wesley Mouch]

I guess I should say I am pro union. Solvency or not it shouldn't come down to broken promises to retirees and contracts negated.

Doing the honorable thing doesn't require a belief in the benefit or detriment of Unions to society and workers -- one should do the honorable thing regardless of your opinions.

I think we do owe a good pension to retirees -- but I don't think we can do this at the cost of ignoring our obligations to current residents, nor at the cost of people who didn't make those promises.

When you receive a promise, you must always look at the integrity and financial solvency of the person who is granting the promise. City workers got promises from a homeless street person.

Some of the responsibility for Detroit's mess belongs to the workers, too.

Thus, I'm in favor a basic, low-level pension for all city workers, regardless of years worked. Everyone deserves at least the same basic pension. Nobody deserves to get their $100,000 pension whole. It should not have been promised. The city couldn't afford it without harming others. That's what's happening now.

We should be looking at the entire situation and striking balance. Not blindly following promises made without caring who we harm.

[BankruptcyGuy]

Am I correct in thinking that in Detroit and in many Michigan municipalities, obligations for
OPEB are greater - sometime much greater - than obligations for pensions? So far as I
know, no one has argued that the Michigan constitution protects OPEB. Kevyn Orr apperas
to be funding about 10% of the city's OPEB debts if I understand his current plan. Does that
establish a model for all of the other financially challenged municipalities and school districts in Michigan?

I don't know the magnitude of OPEB state-wide.

I do know that:

a) OPEB were unfunded at the state level under Granholm, and under Snyder some [[probably not enough) money has been set aside for them;
b) local school districts have 0.0% control over how OPEB are paid and levels--they are set at the state and dictated down;
c) The MI Supreme Court has specifically ruled that OPEB are NOT protected by Section 24 of the Constitution.

[BankruptcyGuy]

Thread title and content of article don't jive. Looks like a public sector union and pension issue.

I apologize; I should have added something to clarify:

There are two lawsuits in Illinois covering retiree benefits and pensions. The first was a challenge to retiree healthcare [[they went from $0 premiums to some level), and the second was a challenge to a law limiting COLA and adjusting retirement ages.

Surprisingly, the IL Sup Ct ruled in the first case that healthcare couldn't be modified at all. It follows [[to most commentators) that the 2nd case will come out in the retirees' favor as well.

In Illinois, as a result, there can be no downward modification of retiree pensions and benefits, under state law.

If you read to the end of the article, there is a mention of cities possibly filing bankruptcy to get around that provision.

Sorry I didn't add those details.

[Dan Wesson]

Like I said before... here

It's probably going to get worse as the government has become the employer of last resort. Based on the ability to pay for it all using the "faith and goodwill of the american taxpayer".

May the gods help us all...

http://www.foxnews.com/us/2014/07/05...ship-declines/

"Since 2000, factories have shed more than 5 million jobs. Five states — Virginia, North Carolina, South Carolina Georgia and Texas — ban collective bargaining in the public sector."

[Honky Tonk]

Like I said before... here

It's probably going to get worse as the government has become the employer of last resort. Based on the ability to pay for it all using the "faith and goodwill of the american taxpayer".

May the gods help us all...

http://www.foxnews.com/us/2014/07/05...ship-declines/

"Since 2000, factories have shed more than 5 million jobs. Five states — Virginia, North Carolina, South Carolina Georgia and Texas — ban collective bargaining in the public sector."

The part that gets me is "Union dues were raised the first time in 27 years to offset declining membership". Wouldn't it stand to reason if there are less members, administration would be reduced as well?

[sumas]

Doing the honorable thing doesn't require a belief in the benefit or detriment of Unions to society and workers -- one should do the honorable thing regardless of your opinions.

I think we do owe a good pension to retirees -- but I don't think we can do this at the cost of ignoring our obligations to current residents, nor at the cost of people who didn't make those promises.

When you receive a promise, you must always look at the integrity and financial solvency of the person who is granting the promise. City workers got promises from a homeless street person.

Some of the responsibility for Detroit's mess belongs to the workers, too.

Thus, I'm in favor a basic, low-level pension for all city workers, regardless of years worked. Everyone deserves at least the same basic pension. Nobody deserves to get their $100,000 pension whole. It should not have been promised. The city couldn't afford it without harming others. That's what's happening now.

We should be looking at the entire situation and striking balance. Not blindly following promises made without caring who we harm.

Actually in the main I agree with you. But in the main expecting seniors to suffer is dead wrong.

For the record neither my husband or I were ever union members nor city workers.

The city did shoot itself in the foot with bad contracts that were outsourced.

[313WX]

Illinois has the same constitutional provision as Michigan, but our courts have interpreted it a different way. If the Sixth Circuit court of appeals finds that Judge Rhodes is wrong, the whole deal is out the window.

But what if the Sixth Circuit Court of Appeals' ruling comes after Detroit exits bankruptcy court?

Unless the ruling is retroactive, why would it have any bearing on Detroit's case.

[BankruptcyGuy]

But what if the Sixth Circuit Court of Appeals' ruling comes after Detroit exits bankruptcy court?

Unless the ruling is retroactive, why would it have any bearing on Detroit's case.

Part of the settlement will require the parties to dismiss their case before the Sixth Circuit. I think the hearing is July 30, which would mean an opinion probably by the end of the year.

If we get to the end of the year without a deal, and the Sixth Circuit rules against the City, the entire bankruptcy proceeding is thrown out.

[mwilbert]

It's probably going to get worse as the government has become the employer of last resort. Based on the ability to pay for it all using the "faith and goodwill of the american taxpayer".

This is simply made up. Federal and state and local payrolls have all been falling in the recent past, and here's a graph showing the ratio of government employees [[fed, state, and local) to all non-farm employees. Note how the ratio peaked almost 40 years ago.

[Wesley Mouch]

Actually in the main I agree with you. But in the main expecting seniors to suffer is dead wrong.

For the record neither my husband or I were ever union members nor city workers.

The city did shoot itself in the foot with bad contracts that were outsourced.

I agree with you. We should do everything we can to protect those seniors who have very small pensions. [[And those with bigger pensions should be contributing to them.)

The best thing we can do is to right the financial ship -- which is happening. And then stop focusing on income inequality, racism, outsourcing, quantity of city jobs, union work requirements, work rules and just run an efficient city that takes care of trash, water, schools, transit, police, and fire. No more absurd Human Rights departments. No more racial preferences. No more city residence thoughts. Just focus on core needs. Once good city services are returned at a reasonable tax rate, then we can worry about all that.

[sumas]

Good example of bad outsourcing. I had a small landscape company, as a volunteer I designed landscaping for ugly large concrete planters on Jefferson from Alter to Chalmers. Due to the nature of the grant we had to use a city minority contractor. I had priced out the plantings at a little over 3K. The city appointed contractor charged 18K. They didn't even do any work just delivered. It was gross waste. Since I was a volunteer, I would have expected no compensation just good will.

This same company has a contract to mow vacant city owned lots. They showed up on our block but we maintain as a community all our vacant lots. They kicked up their heels and lounged for 3 hours. Do wonder what was billed out. They didn't do shit all.

[Wesley Mouch]

Good example of bad outsourcing. I had a small landscape company, as a volunteer I designed landscaping for ugly large concrete planters on Jefferson from Alter to Chalmers. Due to the nature of the grant we had to use a city minority contractor. I had priced out the plantings at a little over 3K. The city appointed contractor charged 18K. They didn't even do any work just delivered. It was gross waste. Since I was a volunteer, I would have expected no compensation just good will.

This same company has a contract to mow vacant city owned lots. They showed up on our block but we maintain as a community all our vacant lots. They kicked up their heels and lounged for 3 hours. Do wonder what was billed out. They didn't do shit all.

Great example.

Never, ever try to use municipal actions to further social goals.

City contracts become gifts granted to friends and supporters.

[Hermod]

Good example of bad outsourcing. I had a small landscape company, as a volunteer I designed landscaping for ugly large concrete planters on Jefferson from Alter to Chalmers. Due to the nature of the grant we had to use a city minority contractor. I had priced out the plantings at a little over 3K. The city appointed contractor charged 18K. They didn't even do any work just delivered. It was gross waste. Since I was a volunteer, I would have expected no compensation just good will.

This same company has a contract to mow vacant city owned lots. They showed up on our block but we maintain as a community all our vacant lots. They kicked up their heels and lounged for 3 hours. Do wonder what was billed out. They didn't do shit all.

The problem isn't "outsourcing" per se, the problem is "friends and family outsourcing".

We have contract garbage and trash pick up by a contractor and the city holds their feet to the fire for full performance of the contract as written.

[sumas]

I have no particular problems with Rizzo, our new trash contractor except for two, the trucks race up and down the street even with no pick ups at high rates of speed and they always go the wrong way up Vernor which is a one way street. We have children, seniors and disabled folk around here. Safety issues.