By Kris Hamel, May 19, 2014
Ballots will be sent the week of May 12 to tens of thousands of city of Detroit retirees to vote “yes” or “no” to pension cuts being imposed by the state-appointed emergency manager, Kevyn Orr. These cuts are part of the municipal bankruptcy forced onto the city by Orr and his law firm, Jones Day, and Gov. Rick Snyder, a rightwing Republican.
Meanwhile, Detroit pensioners and supporters plan weekly protests on Fridays and a national demonstration on July 24.
A big-business media campaign is claiming that the cuts, if approved by the pensioners, will be 4.5 percent for nonuniformed retirees and full payment for police and firefighters.
However, buried in the 440-page disclosure statement being sent to the retirees along with the ballots is the truth about the pension cuts.
For nonuniformed retirees, in addition to imposing the 4.5 percent cut in base payments, a “yes” vote will result in the elimination of the 2 percent yearly cost-of-living adjustment for the next 10 years. This means another 14.5 percent reduction in pensions.
In addition, the plan calls for “recovering” — taking! — interest payments from the pension fund on annuities paid for out of retirees’ own funds. This results in 8.8 percent further cuts in payments.
The total cut in pensions, based on Orr’s own figures, is an average of 28 percent per retiree, a far cry from the 4.5 percent touted by the EM through his media flunkies.
This doesn’t include the virtual elimination of health benefits for retirees, which will now be paid out of a Voluntary Employee Benefit Association with very limited funding. This VEBA, the disclosure statement says, will not be able to maintain the slashed benefits which went into effect on March 1, with retirees receiving a measly $125 monthly stipend to help pay for Affordable Care Act premiums.
For police and firefighters, even with a “yes” vote the actual pension reduction is 17.4 percent due to cost-of-living cuts and annuity take backs.
Retiree boards submit; neocolonialism exposed
A corporate media frenzy is trying to get retirees to approve the slashing of their pensions. If the vote rejects the cuts, the EM and media threaten to cut an additional 19.5 percent for general retirees and 8 percent for police and firefighters, and the collapse of the so-called “grand bargain” to fund pensions.
The Detroit Retired City Employees Association, the Retired Detroit Police and Fire Fighters Association and the “Official Committee of Retirees” appointed by the bankruptcy trustee are all going along with these pension attacks. The Detroit General Retirement System Board preliminarily approved them as well.
The grand bargain is a scheme wherein the city of Detroit would make no pension contributions for 10 years. Instead, the pensions would be funded during that period by $350 million in contributions from corporate charitable trusts, $350 million from the state of Michigan and an additional $100 million from the Detroit Institute of Arts, which would continue to function under the direction of an independent formation. If the charitable trusts or DIA are unable to make their contributions, pensions will be cut further.
In addition, the state funding (actually a $190 million bond) has conditions attached to it. These include 20 years of oversight of the city’s financial and policy decisions, including pensions, by a financial board to be named by the governor and state legislature. This will guarantee suburban, white, Republican, racist, neocolonial control over the resources and functioning of this majority African-American city for the next two decades.
STOP: ‘Cuts must be rejected’
The Stop Theft of Our Pensions Committee, an outgrowth of the Moratorium NOW! Coalition, is calling for a “no!” vote by pensioners, and the rejection of any cuts in the deferred wages earned by Detroit’s retirees.
STOP rejects the idea that retirees should be grateful for the corporate foundations’ and state’s “grand bargain.” Instead, the committee says that the banks, which devastated Detroit with their racist, predatory lending practices that led to over 100,000 home foreclosures from 2005 to 2012, owe the city billions of dollars in reparations for the destruction they’ve caused.
STOP notes that a March report by the Michigan Municipal League titled “The Great Revenue Sharing Heist” documented that since 2003, the state of Michigan has effectively stolen $6.2 billion from Michigan cities, including $732 million from Detroit alone, by diverting state sales tax revenues earmarked for cities to the state treasury. The state of Michigan owes Detroit far more than its $190 million share of the “grand bargain.”
The committee is also demanding that the $120 million paid by the city of Detroit for “professional fees” during the bankruptcy, in what amounts to a looting of the city treasury sanctioned by the bankruptcy court, be immediately restored.
Organizations around the U.S. are weighing in and recognizing the dangerous precedent that will be set if Detroit retiree payments are slashed despite Michigan’s constitutional bar to impairing accrued pensions. In early May, the California Public Employees Retirement System and the American Association of Retired Persons filed amicus briefs in support of appeals of Judge Steven Rhodes’ decision that the Michigan constitutional ban on diminishing pensions is superseded by federal bankruptcy law.
The Detroit retiree committee of the American Federation of State, County and Municipal Employees Union voted against the proposed pension cuts and endorsed the call for a national demonstration on July 24, when the bankruptcy trial starts.
The Moratorium NOW! Coalition and the Stop Theft of Our Pensions Committee, energized by the May Day demonstrations hitting the banks, the court and the emergency manager, have called for “Freedom Fridays” in Detroit. Weekly demonstrations will gather on Fridays at 4 p.m. at the bankruptcy court.
For more information, visit moratorium-mi.org or call 313-680-5508.
This article also appeared on workers.org.