A United States bankruptcy judge has ruled that Detroit is eligible for creditor protection, allowing the city to make cuts to its pensions.
Judge Steven Rhodes noted that the city’s pension debts are no different than its other debts but would not automatically approve any cuts.
“Nobody should interpret this holding, that pension rights are contract rights, to mean that this court will necessarily confirm any plan of adjustment to impair pensions,” he said in his decision. “It will not casually or lightly exercise the power under federal bankruptcy law to impair pensions.”
The General Retirement System Board and the Police and Fire Retirement System Board both disagree with the court’s ruling and intend to appeal the decision in order to uphold the pensions clause of the state constitution.
“The pensions clause of the Michigan Constitution absolutely bars any attempt by the city to cut or impair accrued pensions, no matter the reason,” they said in a joint statement.
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