State and Cities React to Judge’s Ruling to Allow Detroit Bankruptcy

By: WILX NEWS 10
By: WILX NEWS 10

Governor Rick Snyder’s Press Secretary Sara Wurfel, says he worked hard to avoid a bankruptcy, but it was the only option.  Now he wants to let the process move forward, and let the court decide how deep pension cuts should be.  "I think that that's something certainly the Governor and the team is very cognizant of.  When somebody has worked hard all their life and you count on that, I think that's just going to be part of this process moving forward is how everybody can work together to really minimize the impact as much as possible and have it be fair."

Federal Judge Steven Rhodes ruled Tuesday, the city can fix it’s financial mess through Bankruptcy. The ruling clears the way for the city to come up with a plan to shed $18 billion in debt. It comes four months after Detroit sought Chapter 9 protection in the largest public filing in U.S. history.

Detroit’s Mayor Dave Bing is pleased with the decision. "This opportunity today gives us a chance to move forward with a clean slate and make good decisions that will improve the quality of life for Detroit and its citizens."

Outside the Federal Courthouse in downtown Detroit, about 100 protesters carried signs and chanted “We want justice." Mayor Bing says Bankruptcy will be good for Detroit. "We can't think that bankruptcy is the worse thing that ever happened to us. it can help us now because it will allow us once again to deal with the things that should have been dealt with over the last 20 or 30 years."

The financial mess is historic. Detroit’s Emergency Financial Manager Kevin Orr, says his team is negotiating with creditors and will work through the holidays to hammer out a reorganization plan by the new year. Said Orr, “This eligibility ruling, you know, I likened it to taking a very long trip. We had our map out. We had the tank full of gas, and the car was in the driveway. We're now heading down the road, but we've got a long road ahead.”

The long road includes more cuts that could cause more pain for the city's retirees. Judge Rhodes’ ruled their pensions are still on the table. Detroit's pension fund is short by $3.5 Billion. Governor Rick Snyder’s Press Secretary Sara Wurfel, says he worked hard to avoid a bankruptcy, but it was the only option. Now he wants to let the process move forward, and let the court decide how deep pension cuts should be. "I think that that's something certainly the Governor and the team is very cognizant of. When somebody has worked hard all their life and you count on that, I think that's just going to be part of this process moving forward is how everybody can work together to really minimize the impact as much as possible and have it be fair."

Summer Minnick, of the Michigan Municipal League says the Governor and Legislature must address how Michigan cities are funded. She says, over the past decade, the state has cut almost $6 billion to local units of government . "It's really a no-win situation. Unfortunately, when you get to a point when you're in an emergency management situation there aren't very many good options, so our hope is that we can steer the conversation to figure out how we can prevent these situations from occurring in the first place."

Detroit's Emergency Financial Manager expects the city to emerge from bankruptcy in September of next year.


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