Bankrupt Detroit To Cut Pensions, $450 Million Hockey Stadium To Be Built
Detroit became the largest U.S. city to declare bankruptcy in July 2013, the city has cut retirees pensions, but plans to build the Red Wings a new stadium are going forward. About two-thirds of the $450 million cost will be paid by tax-payers.
Advocates of the arena say it’s the kind of economic development needed to attract people and private investment in Detroit. It’s an argument that has convinced Governor Rick Snyder and emergency manager Kevin Orr, who oversees the city’s finances, to stay with plans to build. Orr said the bankruptcy filing will not halt the arena plans reported CNN.
“I know there’s a lot of emotional concern about should we be spending the money,” said Orr. “But frankly that’s part of the economic development. We need jobs. If it is as productive as it’s supposed to be, that’s going to be a boon to the city.”
State senate minority leader Gretchen Whitmer said last year “If you want people to live in the city, and not just visit to go to games, you have to invest in schools, in having the police to respond to calls. There are so many investments that should trump a sports stadium.”
The pension deal requires civilian retirees to accept a 4.5% cut to their monthly checks and elimination of cost-of -living (COLA) adjustment increases while police and fire retirees get no cuts to monthly checks but absorb a reduction in COLA increases reported The Detroit Free Press.
The city has about 32,000 retirees, beneficiaries and active employees entitled to pension checks.
Detroit’s financial problems have happened over time due to bad city government and the city’s massive population decrease.
The Motor City was the third largest city in the United States with a population of 1.86 million in 1950. It now has about the same population it did in 1910 at around 700,000.
Retired police and firefighters received average payments of $30,607 in 2012 and general city workers got $19,213.
One difference between the groups of retirees: Civilian retirees receive Social Security, while cops and firefighters do not.
“I didn’t think it’s fair that (police and fire) are going to get a better deal,” said Donald Smith, 69, who receives and annual pension of $11.000 a year after working 29 years as a civilian detention officer. “The fact was, they were working for the city just like we were working for the city.”
Arthur Versace, 62, is a retired fire captain who receives around $45,000 from his pension, said the deal is fair since the benefits come from two separate, independently managed funds.
“Their investments haven’t done as well as ours,” he said. “I feel for them, but we’re separate from them as far as our pension system.”
Dorothea Harris, 63-year old retired housing department supervisor, who receives around $20,000 a year from her pension said “I already did the work. The state Constitution guaranteed my pension.”
[Image via detroit.about.com]