DETROIT - Detroit's emergency manager's team met behind closed doors with city pension leaders. The key group was asked to endure huge cuts in benefits and health insurance or face the uncertainty of the largest municipal bankruptcy in U.S. history.
Detroit's money crisis is nothing new but it's directly impacting thousands of families, who like all of us, have household budgets to manage. City workers and retirees are wondering what's going to happen to the pensions they've earned.
Some bankruptcy experts say the session might just be the tipping point that leads to an unprecedented bankruptcy. The city's retirement system is underfunded by $3.5 billion. Orr's plan asks some to take only 10 cents on the dollar -- or less -- on the debt the city owes.
Representatives of city unions and pensions lined up for meetings with Orr's restructuring team. Orr wants to trim pension benefits and the unions say he's moving way too fast.
"We can't keep up with it, I mean its being thrown at us a pretty quick rate," said Joe Barney EMS union president.
Orr's spokesman Bill Nowling counters that notion "every minute we wait to implement the restructuring is more time that services are not being provided."
Unions are also unhappy about what they say are requests from Orr's people to keep the meetings confidential. UAW lawyer Michael Nicholson says he would not agree to clam-up and was asked to leave the meeting.
"I said 'we can't agree to those conditions' we're talking about a public issue, the City of Detroit is a public entity," said Nicholson.
Flashpoint: Conversation on Detroit's finances
The confidentiality issue surfaced because of two new lawsuits filed on behalf of Detroit workers and retirees who want to prevent Governor Rick Snyder from authorizing a bankruptcy filing.
Under Chapter 9, retirees would lose protections they now have.
"Under the State Constitution, absent bankruptcy, the parties do not have the authority, that I'm aware of, to sit down at the table and reduce or impair or diminish retirement benefits on any level once they are accrued," said VanOverbeke.
Orr is now reviewing the funding levels of the cities two pension funds, a process that will take several more weeks and until those numbers are agreed on pension cuts are up in the air.
Orr did not speak to reporters ahead of Wednesday's meeting, but a lawyer for some of the pensioners says they were summoned by Orr for a presentation. Michael Van Overbeke says the two sides "have not had true discussions" yet.
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