The Detroit Free Press had a slew of stories over the weekend related to the city’s bankruptcy. Here’s the most essential reading:
It’s been widely reported that Detroit’s bankruptcy has highlighted flaws in its pension financing and administration, and that’s drawn attention to how public worker pension systems operate. In a look at proposed reforms, their promises and their drawbacks, John Gallagher writes:
Some maintain government pension funds will stay healthy as long as the stock market remains high. Others believe America faces a genuine crisis in which millions of retired teachers, cops, clerks and other government pensioners face cuts to their monthly checks. Just last week, the nonprofit Society of Actuaries released a report by a panel of experts that said the total amount of unfunded liabilities in public pension plans in the U.S. amounts to nearly $1 trillion. Other experts peg the underfunding at three or four times that.
Kevyn Orr spoke with Detroit Free Press writers, telling them he’s frustrated the city’s pensioners haven’t accepted his plan that cuts 26 percent from retired general workers’ payments and 10 percent from police and fire retirees.
The offer is fair, he said, and delaying could jeopardize creation of an $815-million rescue fund meant to boost pensions and protect Detroit Institute of Arts masterpieces from being auctioned to pay off creditors.
Meanwhile, as debate continues about whether (or how) gains made in the downtown and Midtown areas could spread to neighborhoods, the new hockey arena complex is moving ahead with $261 million in public funds. Editorial Page Editor Stephen Henderson weighs in and explains how the structure and management of the arena deal contradicts much of the broader discussion about the city’s future:
Detroit is lost, it seems, when it comes to translating big wins in the city’s core into benefits for most of the people who live here, and we need both city and state government to step it up when it comes to balancing the swell of good fortune that’s overtaking parts of the city.
Under terms of the new stadium deal, Detroit loses the $7 million the team pays the city from percentages of ticket and suite sales, food and beverage concessions, souvenir sales and parking. The deal is raising other questions, the Free Press reports:
Publicly and privately, some residents and elected officials have questioned whether negotiators should have gotten more in the deal for state taxpayers — who are footing much of the construction costs — as well as more financial sweeteners for the City of Detroit, even though its contribution was limited to land for the arena site.