Next Plan for Detroit: Cut Pensions

The first plan for Detroit, which filed for bankruptcy on Thursday, is to make “significant cuts” to the pensions of the city’s 21,000 current retirees, which emergency manager Kevyn D. Orr says account for a $3.5 billion shortfall. But cutting pensions will be an uphill battle for Orr, who was appointed by Michigan Gov. Rick Snyder, who said Sunday that cutting pensions would be a “difficult decision.” The biggest opposition comes from the city’s unions, which say that any cuts violate the state’s Constitution, which protects public pensions as contractual obligations. “Welcome to war,” said Police and Fire Retirement System president George Orzech on Thursday. Detroit now has to prove its right to file for Chapter 9 bankruptcy protection, and then Orr must prove the city is insolvent.