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Article updated: 7/27/2013 11:51 AM

Michigan AG on pensioners' side in Detroit bankruptcy

On July 24, protesters carry a sign outside the Levin Federal Courthouse in Detroit. Detroitís historic bankruptcy filing is a major setback for public sector unions that have spent years trying to ward off cuts to the pensions and benefits of government workers. If the city succeeds, it could put into jeopardy a key bargaining tool for unions that have often deferred higher wages in favor of more generous pension benefits. And it could embolden other financially troubled cities dealing with pension shortfalls to consider bankruptcy, or at least take a harder line with their unions in negotiating cuts.

On July 24, protesters carry a sign outside the Levin Federal Courthouse in Detroit. Detroit's historic bankruptcy filing is a major setback for public sector unions that have spent years trying to ward off cuts to the pensions and benefits of government workers. If the city succeeds, it could put into jeopardy a key bargaining tool for unions that have often deferred higher wages in favor of more generous pension benefits. And it could embolden other financially troubled cities dealing with pension shortfalls to consider bankruptcy, or at least take a harder line with their unions in negotiating cuts.

 

Associated Press/Paul Sancya

On July 24 Dan McNamara, president of the Detroit Fire Fighters Association, speaks to firefighters outside the Theodore Levin United States Courthouse in Detroit. Detroitís historic bankruptcy filing is a major setback for public sector unions that have spent years trying to ward off cuts to the pensions and benefits of government workers. If the city succeeds, it could put into jeopardy a key bargaining tool for unions that have often deferred higher wages in favor of more generous pension benefits. And it could embolden other financially troubled cities dealing with pension shortfalls to consider bankruptcy, or at least take a harder line with their unions in negotiating cuts.

On July 24 Dan McNamara, president of the Detroit Fire Fighters Association, speaks to firefighters outside the Theodore Levin United States Courthouse in Detroit. Detroit's historic bankruptcy filing is a major setback for public sector unions that have spent years trying to ward off cuts to the pensions and benefits of government workers. If the city succeeds, it could put into jeopardy a key bargaining tool for unions that have often deferred higher wages in favor of more generous pension benefits. And it could embolden other financially troubled cities dealing with pension shortfalls to consider bankruptcy, or at least take a harder line with their unions in negotiating cuts.

 

Associated Press/Paul Sancya

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Associated Press

LANSING, Mich. -- Michigan's attorney general says he's joining the Detroit bankruptcy case on behalf of pensioners.

According to a statement released Saturday by his office, Bill Schuette will file an appearance in federal bankruptcy court on Monday.

Pension benefits are constitutionally protected in the state, and Schuette says he will work to defend "Michigan seniors living on fixed incomes and anticipating a safe and secure retirement after a lifetime of work."

Detroit Emergency Manager Kevyn Orr took Detroit into Chapter 9 bankruptcy earlier this month with the blessing of Gov. Rick Snyder. It's the largest bankruptcy by a local government in U.S. history.

The status of employee pensions is expected to be a key issue in the bankruptcy. Orr has said pension benefits could be reduced along with other debts.

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