Now that the dust has settled over the shock announcement of Detroit’s bankruptcy, its citizens are asking how will it affect them personally.
They also want to know: Why did it happen?
Put simply, the city was receiving less and less money, while its expenses grew enormously.
A huge proportion of its financial obligations relate to former city workers, now retired on pension.
Over the decades, the city’s officials made promises about health benefits and pensions, without making adequate provision for where the money would come from.
Some 30,000 retirees are wondering if they are to be the real victims of the Detroit bankruptcy.
In total, the city’s debt exceeds $18 billion; this averages out to about $25,000 for each resident.
The unions have declared that they will fight any attempts to remove or reduce the benefits of their members.
They claim that the city was at fault for, historically, outsourcing services to workers who did not pay any money into the benefits fund.
Ed Mcneil, of the Michigan AFSCME Council 25, which represents the workers, told NBC News: “As older people leave the workforce, the city has been privatizing those jobs instead of bringing people back in to pay into the fund.”
His union also demanded that the city collect the millions of dollars owed to it in unpaid taxes.
He said: “If they went after that money, they could pay their debts.”
The long road to recovery will, doubtless, be littered with legal obstacles,
But, it is those who gave a lifetime of commitment to the city, who fear that they are going to suffer most from the Detroit bankruptcy.
Photo Credit: politiken.dk