The city is declaring bankruptcy. From the Detroit Free Press:
The City of Detroit filed this afternoon for Chapter 9 bankruptcy protection in federal court, laying the groundwork for a historic effort to bail out a major U.S. city that is sinking under billions of dollars in debt and decades of mismanagement, population flight and loss of tax revenue. The filing begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities. “The fiscal realities confronting Detroit have been ignored for too long. I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future,” said Gov. Rick Snyder. “This is a difficult step, but the only viable option to address a problem that has been six decades in the making.”
A big part of the problem is that the city can’t/won’t cover city worker’s unfunded pension liabilities. Also from the Free Press:
Detroit’s two pension funds on Wednesday sued emergency manager Kevyn Orr and Gov. Rick Snyder in an attempt to block Orr from slashing pension benefits for thousands of current and active city workers as part of his plan to restructure the city’s massive debt. The lawsuit asks the Ingham County Circuit Court to declare that Snyder cannot authorize Orr to take any actions — including filing for municipal bankruptcy — that would cut pension benefits, which the lawsuit says are protected by the state constitution.
I imagine the retired city workers who lose their homes will really help get Detroit back on track. Getused to this kind of thing.
There’s a lot more coming as the United States declines.
