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untanglingwebs
El Supremo
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The pension deal hnges on the Michigan Legislature approving the $350 million contribution that will assist the pension and shield the DIA art collection. Without this aid the pension cuts could grow to 29%.
AFSME attorney Sharon Levine noted "this would not be the first time retirees have been lied to." |
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Sun Apr 20, 2014 2:58 pm |
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untanglingwebs
El Supremo
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Some Detroit leaders, like those in Flint, are unsure about signing on to the restructuring plan as it s still in "development".
Snyder's spokeswoman, Sara Wurful, told the media the lawmakers did not need to wait for a vote by pensioners for approval. The Free press reported her e-mail read "any legislation action and appropriation would be contingent upon support of plan and conditions by recipient groups."
Obviously Snyder has lost some influence over his Republican legislators as Jase Bolger is now demanding the unions cough up a significan contribution or the State House will not support the $350 million. |
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Sun Apr 20, 2014 3:09 pm |
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untanglingwebs
El Supremo
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Look at the Emergency Manager's report for April 8,2014, (pages 167-168).
TRANSITION OF THE FLINT EMPLOYEES RETIREMENT SYSTEM (FERS) TO MICHIGAN EMPLOYEES RETIREMENT SYSTEM (MERS)
The FERS to MERS transition will be completed when Model Labor contracts have been finalized. All assets are at MERS and retirees have been receiving their pension from MERS since October 18,2012. The administrative components should be completed by July 1,2014.
RETIREE HEALTH CARE REVISIONS
The City's approach to containing it's OPEB liabilities have been to restructure both active and retiree health care benefits and to eliminate the promise of retiree health care for employees. The changes have had a significant impact on te City's OPEB liabilities, reducing the total unfunded liability from nearly $900 million to less than $400 million and reducing the Annual Required Contribution (ARC) from $60 million to $22 million. |
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Sun Apr 20, 2014 4:06 pm |
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untanglingwebs
El Supremo
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As previously reported, the City's efforts to restructure retiree healthcare was challenged by a group of retiree health care was challenged by a group of retirees in a federal lawsuit WELCH V CITY OF FLINT. On January 3, 2014, the US 6th Circuit Court of Appeals reinstated an injunction prohibiting the City from modifying retiree health are benefits. The City is aggressively litigating this matter, as it does not have the resources to afford the current level of healthcare coverage, and projected costs for the upcoming year are substantial.
If the federal district courts decision is not reversed, the city will be in an extremely precarious financial position, with insufficient resources to meet basic functions. Additionally, the City has asked Ernst and Young to provide a proposal for an analysis of the City's ability to remain solvent in the event the retiree lawsuit is lost. |
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Sun Apr 20, 2014 4:20 pm |
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untanglingwebs
El Supremo
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Activists want the city returned immediately to our elected officials. This does not resolve our current deficit or the growing deficit from legacy costs. When I tell these activists the solution would be bankruptcy, they say" bring it on."
The City of Flint is a Home Rule city created by State law. The State also has the ability to dissolve our city. These activists are not saving Democracy as that train has left the station. We are now a society that is controlled behind the scenes by the wealthy. Instead of discrediting politicians navigating the system, these activists need to concentrate on getting out the vote in non-Presidential elections to elect candidates that support our democratic principles.
When the council in a 5 to 4 decision agreed to commit to the establishment of a transition plan, it was not much different than Judge Rhodes demanding a commitment from the Detroit Mayor and the Council. There needs to be a guarantee that the City will not revert back to the corruption and capricious spending of the past.
Some one has to have the courage to take a stand towards rebuilding our city. True the Emergency Managers of the past made decisions that benefited the wealthy downtown business. However, when Councilman Freeman was on the Ac Dumas Show, he stated that Earley was the only EM to interact with transparency to them. |
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Sun Apr 20, 2014 4:50 pm |
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untanglingwebs
El Supremo
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May 19, 2014 at 1:00 am
Retiree suit threatens to tip Flint into bankruptcy
Michael Martinez
The Detroit News
Flint suffers from a dwindling population and urban decay that create nearly deserted streets like this in the once-vibrant city. The prospect of filing for bankruptcy protection looms. Purchase Image
Flint suffers from a dwindling population and urban decay that create nearly deserted streets like this in the once-vibrant city. The prospect of filing for bankruptcy protection looms. (David Coates / The Detroit News)
Flint— Vehicle City has faced its share of setbacks over the years — shuttered factories, dwindling population and urban decay, to name a few — but none has cast as dark a shadow as the prospect of filing for municipal bankruptcy protection.
The struggling Genesee County community may soon be pushed over the financial cliff by a lawsuit. A group of city retirees is suing the city to stop proposed cuts to their health care benefits — a $5 million annual burden that could force Flint to become Michigan’s second-largest municipality to file for Chapter 9 bankruptcy protection, following on the heels of Detroit.
“The city won’t be able to stay solvent at this rate,” said Emergency Manager Darnell Earley. “I don’t want to see a bankruptcy in the city of Flint, and I’m going to do everything I can to make sure that doesn’t happen. If we get no relief from that retiree health care, then we have to start talking about that.”
It’s the latest dilemma for a once-thriving automotive hub that is experiencing many of the same problems as Detroit.
When the sprawling General Motors plants closed around the turn of the century, Flint’s downward spiral hastened.
Today, nearly one-third of its population lives in poverty. Tens of thousands of jobs have been lost and about 15 percent of the workforce is unemployed. And the population — once nearly 200,000, ranking it as Michigan’s second largest city — struggles to stay above the 100,000 mark.
The loss of tax revenue has rocked the city’s budget. Police and fire departments stand to lose dozens of workers to cuts. The school system has laid off teachers and closed buildings. And residents increasingly complain about a lack of basic public services such as trash pickup and police response.
“They’re in a very tough bind,” said Eric Scorsone, a Michigan State University economist who has closely tracked Flint’s financial troubles. “There have been improvements, but bankruptcy is still definitely a scenario.”
So grim was Flint’s financial situation in late 2011 that the state placed the city under emergency management.
At that time, the city had about $150 million in long-term debt, not to mention $900 million in unfunded liability for retiree health care. The city has cycled through multiple managers, including Earley, who was appointed in October.
“Since (2011) there’s been a lot of progress made in terms of identifying some of the remedial steps that are necessary to address the financial emergency,” Earley said.
Since its earliest days, Flint has been defined by manufacturing.
The city was known for its lumber industry in the 1800s, said Thomas Henthorn, a history professor at the University of Michigan-Flint.
The cigar, wool and carriage industries played big roles, too. But no business had a bigger footprint or impact than the automobile industry.
“The car itself as an icon kind of dominates Flint’s image for most of the middle of the 20th century,” Henthorn said. “The car industry really dominated our local economy.”
Flint was the birthplace of General Motors.
Sprawling auto plants like the 235-acre Buick City and 130-acre Chevy in the Hole once employed more than 80,000 workers, making everything from Buick LeSabres to Chevy Corvettes.
Other industries, including supplier factories and tool and die plants, flourished as well, and neighborhoods sprouted up around the plants as workers sought housing near their jobs.
But after the 1970s, Flint suffered the same fate as many Midwestern cities whose economies were tied to durable goods.
The auto industry began to leave the city, building plants in suburbs and, later, other countries. Workers left in search of jobs elsewhere.
Today, Chevy in the Hole and Buick City are abandoned lots, with weeds poking through cracks in miles of gray pavement.
Police, firefighter cuts
The latest chapter in Flint’s financial woes came in 2012 after former Emergency Manager Michael Brown decided that retired city employees should pay more for their health coverage. The retirees filed a lawsuit in 6th Circuit Court; a court date has not been set.
Fully aware that the city may have to absorb the costs, Earley proposed cuts in a two-year budget unveiled in April that calls for the elimination of 19 firefighter and 36 police officer positions as well as seeking higher fees for city services such as street lighting and garbage pickup.
“To balance the budget, that’s where we have to go to make the cuts,” Earley said.
“We’re at a point now where we believe the city can still deliver a satisfactory service level, nothing more, nothing less, no bells and whistles.”
The number of reported arsons in the city has decreased over the past few years, but FBI statistics show the city still had the highest per capita rate of arsons with its 226 in 2012, compared to 287 in 2011. In 2012, Flint led the nation with its homicide rate. Flint and Detroit were the most violent cities in America, according to 2012 FBI crime statistics.
The Michigan State Police has stepped up patrols in Flint since 2012 when Gov. Rick Snyder added officers there and in other high-crime cities.
Still, Crystal Hampton, a 26-year-old Flint resident, is concerned about the proposed cuts in emergency services.
“We already don’t have any (police officers),” she said. “Flint is not safe. There’s no schools here for our kids, there’s nowhere safe for them to play. It’s scary here.”
Hampton complained about high water bills, high bus fares, slow police response times and high crime rates. She said she doesn’t want the weather to warm up, because that means more crime.
“We’re just barely making it,” she said.
Downtown hope
Despite talk swirling about bankruptcy, Flint’s businesses are investing in downtown.
Uptown Developments, a nonprofit partnership between four wealthy families and the Mott Foundation, has contributed greatly to downtown’s revival. Since 2000, the group has purchased about a dozen properties and redeveloped them into loft apartments, offices and retail space.
“When we started, all of the buildings were boarded up; you rarely saw anyone walking on the sidewalks,” said Scott Whipple, Uptown’s development manager. “Today, downtown is truly vibrant. There are a ton of pedestrians. Bars and restaurants have opened up. People’s attitudes have changed.”
Within the past few years, a crepe-maker went from a mobile cart to a brick-and-mortar store along Saginaw Street. And other retailers, including a high-end shoemaker, have started to fill in empty storefronts.
A new 32,000-square-foot farmers’ market is under construction near the old Flint Journal building; MSU will add about 100 jobs when a new $19 million medical school is complete; Genesys Medical Center just opened a new health center downtown; and GM is again investing, breaking ground in March on a $600 million paint shop that will employ about 600 workers.
“Those are all good, positive, encouraging signs the city of Flint is very much alive and well,” Earley said.
Even Flint’s biggest symbols of decline — its abandoned auto plants — are poised for redevelopment, including a pipe-maker who’s planning a manufacturing plant at the Buick City site.
“It will never be what it was in the heyday of Chevrolet and Buick and AC Delco,” Earley said. “But it’s worth noting a lot of people are working hard and investing trying to help define what these new communities will look like.”
mmartinez@detroitnews.com
(313) 222-2401
Twitter.com/MikeMartinez |
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Mon May 19, 2014 8:24 am |
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untanglingwebs
El Supremo
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On May 25th of 2014 the Detroit free Press expanded this editorial to"Without changes, the state is setting up more cities to fail"
Some retirees volunteered that their pensions from the city are between $62,000 and $82,000. Remember all the stories of one Police administrator who retired making more than he made while working.
Flint early retirements offered some workers as much as 5 free years t be calculated towards their retirement. Others were allowed to buy time for military service, etc.. These early retirement plans obviously were not well thought out as to future costs.
Police requested an early retirement under Williamson and were furious when the calculations showed the city could not afford the request. |
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Mon May 26, 2014 8:02 am |
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untanglingwebs
El Supremo
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Detroit emergency manager warns 'cuts will be ... - Detroit Free Press
www.freep.com/.../NEWS06/305300106/detroit-bankruptcy-orr-grand-bargain-pension - 218k - Cached - Similar pages
21 hours ago ... Detroit emergency manager Kevyn Orr warned today that retirees who may be considering a vote to reject the grand bargain that spares the ...
Orr: $1 Billion Detroit Bankruptcy Deal At Risk « CBS Detroit
detroit.cbslocal.com/.../05/30/orr-pitfalls-remain-to-resolve-detroit-bankruptcy/ - 97k - Cached - Similar pages
22 hours ago ... MACKINAC ISLAND (AP) – Detroit's emergency manager warned Friday that a complex package of nearly $1 billion in possible aid for the |
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Sat May 31, 2014 8:50 am |
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untanglingwebs
El Supremo
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Detroit emergency manager warns 'cuts will be severe' if pensioners reject grand bargain
7:54 PM, May 30, 2014 | Comments
Kevyn Orr: 'Severe' cuts if retirees reject plan: Detroit's emergency manager spoke to reporters at Mackinac Island.
By Matt Helms and Kathleen Gray
Detroit Free Press Staff Writers
MACKINAC ISLAND — City of Detroit retirees considering whether to approve the grand bargain that eases pension cuts and spares the works at the Detroit Institute of Arts should have no illusions or false hopes about what a “no” vote could mean, emergency manager Kevyn Orr warned Friday.
“We want to make sure people understand that it doesn’t get better by voting no,” Orr told reporters after a keynote speech Friday, the final day of the Detroit Regional Chamber’s annual policy conference on Mackinac Island.
His comments came ahead of a state Senate vote expected next week on the state’s nearly $195 million contribution to the DIA-pension deal, in which the museum would be spun off from the city into a private authority for about $816 million, with the proceeds used to reduce pension reductions for city retirees.
That money disappears if retirees reject the plan, with both facing even harsher cuts. Orr said he has heard that some retirees are pledging to vote no as a protest, or to hold out in hopes of a legal challenge based on Michigan’s constitutional protection of pensions that U.S. Bankruptcy Judge Steven Rhodes has ruled is trumped by federal bankruptcy law.
■ What they’re saying: Political, business leaders feeling upbeat about grand bargain and Detroit
■ Full coverage: City of Detroit files for bankruptcy
“If we do not get this plan through, if we have to go back to the drawing board, the cuts will be severe,” Orr said, “and we will not be able to be as compassionate, which is what we want to do.”
So far, as many as 15% of votes among three classes of retirees have been returned to the city, Orr spokesman Bill Nowling said Friday, and they’re running roughly 2-1 in favor of accepting the deal.
■Ballot breakdown: Susan Tompor: City retiree health care to be handled by trusts; why some get 2 ballots
■ Ballot breakdown: Q&A: Answers to your Detroit bankruptcy ballot questions
■ Ballot breakdown: Susan Tompor: Pain won't be the same for everyone
“Early returns seem to be supportive, but here again I’m taking nothing for granted in this process,” Orr said. “I think a lot of people are waiting until they see if the Senate funding comes in so that whole $816 million is there, and I think we’ll see voting” then.
Senate Majority Leader Randy Richardville said Thursday that he believes the Senate will take up the legislation next week, predicting it will pass. The House of Representatives overwhelmingly approved the funding last week.
Orr also acknowledged Friday that inaccurate ballots sent out to about 2,200 retirees represents a $15-million mistake. Orr’s team doesn’t know if any of the faulty ballots have been returned and tabulated.
Nowling said the affected pension beneficiaries will be given new ballots, and if they’ve already voted, their new ballots will supersede earlier votes.
The city admitted earlier this week that those ballots included inaccurate information on how much some General Retirement System retirees would have to pay back in annuity savings fund proceeds given out in 2003-2013. The city is requiring that pensioners pay back these excess interest payments for those 10 years, pro-rated over the lifetime of their pensions. But because of an actuarial error, the inaccurate ballots included an additional six months of excess payments from the 2002 fiscal year.
A majority of those 2,200 retirees who got bad ballots now won’t have to pay back any interests, and many others will see the amount they have to pay back reduced by $43 a month, Nowling said.
But that represents $15 million the city now will not get back from the annuity savings. Rather than redo all the city’s bankruptcy assumptions and send out new ballots to everyone, “we made a decision that we would accept the fault, and that’s on the city,” Orr said. “That’s about a $15-million cost we’d have over the years. We’re not going to recover that.”
Orr accused financial creditors of spreading false information to the New York financial press and to Michigan senators, arguing that Orr is abdicating his duties and treating bond holders and others unfairly compared to pensioners. They argue creditors would fare better if DIA art were sold.
Orr said that even if the DIA’s works were worth $2 billion, and pensioners sided with other creditors to go after selling the art, that money would be spread out among all creditors, and pensioners would get less than they’re offered in the grand bargain.
“This is a very delicate, balanced series of negotiations and settlements,” Orr said. “Trying to upset that and where it will lead us to the detriment of the city, to the detriment of some of our pensioners, just isn’t helpful.”
In his speech Friday morning, he said the argument for the bankruptcy isn’t just about a nameless, faceless business, but a city with residents and homes and a tradition of greatness.
“Everyone in this room is a stakeholder of the future of one of America’s great cities,” Orr told the audience. “Detroit has been central to the history of America since its inception. There are 21 economic centers in the United States that account for half of GDP, and Detroit is one of them.”
He noted that some creditors are extremely upset about the plan of adjustment, even resorting to sending packages of “misinformation” to the financial press in New York about how the art should be sold to settle the bankruptcy.
“Fair enough, I just have put my big boy pants on,” he said.
He thanked House members for taking the tough, “courageous” vote to approve the grand bargain.
“Many of them had very strong beliefs, but they stepped up to the plate and realized that this was really a salvation to the city,” Orr said. “That was quite rewarding.”
Still, Orr said he’s “more concerned at this point than I have been at any point,” particularly related to the votes of creditors and retirees who have until July 11 to turn in ballots. He urged the audience to talk with pensioners about the consequences of a no vote, including much bigger cuts to pension benefits.
“This is not the time for a protest vote,” he said.
The Senate Government Operations committee is scheduled to begin considering the 11-bill package Tuesday. The bills range from setting up the mechanism to send $194.8 million to the city, to setting up a nine-member oversight commission that will have authority over the city’s finances, budgets and contracts for at least 13 years, to the level of contributions made to city employees retirement and health care plans.
The bills received wide, bipartisan support in the House last week, and while the support for the legislative package of bills in the Senate may be strong, it will not be unanimous.
“Although I’m very happy that Detroit’s business area is turning around and young people are attracted to the downtown, I think it’s the wrong move. I’m going to vote with my constituents who think the grand bailout is a bad deal,” said Sen. Rick Jones, R-Grand Ledge. “I believe the votes are there to pass it, but my vote will not be one of them.”
State Rep. John Walsh, R-Livonia, shepherded the package of bills through the House and spent a good portion of his time on Mackinac talking to senators about their concerns.
“They’ve been asking me, ‘Why does it matter? How do I explain back at home?’ And I’m cautiously optimistic,” Walsh said. “There will be a few absolute no votes, but the people who are here at this conference view regional solutions as statewide solutions.”
Sandy Baruah, president and CEO of the Detroit Regional Chamber, said supporters of the legislation “need to help correct the misconceptions out there about what’s in the package,” and his group will lobby in Lansing to do so.
“There are some who are out there who are trying to present the package as something that it’s not, saying things like if they sold the art they’d get a better deal. All of that is blatantly untrue,” he said. “If creditors are making an ill-informed decision based on that sort of statement, that’s bad news for everybody, and especially bad news for pensioners. If this package goes down, there’s almost $1 billion on the table that will evaporate.”
Sen. Mike Kowall, R-White Lake, said he is a yes vote on the package as long as he’s convinced that taxpayers are protected.
“We know that something has to be accomplished and we can’t leave this thing languishing,” he said, adding that Chief U.S. District Judge Gerald Rosen, the mediator for the bankruptcy case, is expected to make a presentation on the negotiated plan of adjustment to the Senate Republican caucus next week.
“I’m not sure if the votes are there to pass it,” Kowall said. “That’s the thing, when you’ve got 38 members, you have 38 different opinions.”
New Orleans Mayor Mitch Landrieu, who spoke during the conference after Orr, called Detroit’s bankruptcy — like Hurricane Katrina’s destruction of New Orleans — “an American tragedy that requires an American response.”
Landrieu said Mayor Mike Duggan and other city and state leaders need to brace for tough decisions about how to rebuild Detroit. But he said the bankruptcy provides the city an opportunity to bring about dramatic, much-needed reforms and chances to rethink everything from the city’s schools to city hall and critical public services such as policing and blight.
“We’re not rebuilding back to what we used to be,” Landrieu said. “We’re building the city we should have been.”
Landrieu said the reason the nation needs to support Detroit’s revival is simple.
“We owe you,” he said, noting Detroit’s history as the Arsenal of Democracy, building the tools needed during times of war and putting America on wheels in good times.
“Bankruptcy is just a weigh station toward a better future,” he said. “It sounds like everyone is coming together very nicely. You should be proud. It sounds to me like you all have it going on and are getting your mojo back.”
Contact Matt Helms: 313-222-1450 or mhelms@freepress.com. Follow him on Twitter: www.twitter.com/matthelms. |
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Sat May 31, 2014 8:56 am |
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Adam
F L I N T O I D
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Tue Jul 08, 2014 2:29 pm |
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untanglingwebs
El Supremo
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After Detroit, another city ponders bankruptcy
Associated Press By JEFF KAROUB
53 minutes ago
In a June 12, 2014 photo in Flint, Mich., the skyline of the city is seen from the west side. As Detroit hopes to ride out of bankruptcy this year, a smaller Michigan city with a similarly strong bond to the automotive industry soon could drive in. Flint, like its bankrupt big brother an hour’s drive south, has suffered a spectacular drop in population and factory jobs with a corresponding rise in property abandonment and crime. (AP Photo/Carlos Osorio)
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FLINT, Mich. (AP) — As Detroit struggles to climb out of bankruptcy, another Michigan city with strong ties to the auto industry may be about to fall into the same hole.
Flint, the birthplace of General Motors that once had 200,000 residents, has also endured a spectacular drop in population and factory jobs and a corresponding rise in property abandonment, much like its insolvent big brother an hour's drive south.
If a judge rules against Flint's effort to cut its retiree health care benefits, the city is expected to join about a dozen cities or counties that have sought help from the courts since the start of the recession.
"If we don't get any relief in the courts ... we are headed over the same cliff as Detroit," said Darnell Earley, the emergency manager appointed by Gov. Rick Snyder to manage Flint's finances. "We can't even sustain the budget we have if we have to put more money into health care" for city workers.
Before Detroit, the largest local government bankruptcy filing was in Jefferson County, Alabama, in November 2011. The county emerged last year after reorganization of its $4 billion in debt. Court proceedings continue for the California cities of Stockton, San Bernardino, and Mammoth Lakes, all of which filed in 2012.
The greatest threat of new cases may be in Michigan, where about a dozen cities and four school districts are under state control. The state unemployment rate still is 7.3 percent, and some entities remain saddled with underfunded pension plans.
That Flint might follow Detroit, which filed in July 2013, isn't surprising, given their shared circumstances. Both were once boomtowns brimming with auto jobs for collars white and blue. General Motors employed about 80,000 in the area in the early 1970s. Fewer than 8,000 GM jobs remain. The city's population has fallen to just below 100,000.
The community is probably best known by many as the hometown of filmmaker Michael Moore, whose 1989 documentary "Roger and Me" chronicled in first-person, court-jester fashion the automaker's retrenchment and the effect on the city.
Today the city is a mixed picture of hope and desolation. Downtown bustles with people going to government offices, the growing University of Michigan branch campus and businesses along red-brick paved Saginaw Street, which features several striking iron arches that span the roadway and are replicas of those from a century ago.
But on the edge of the business district, overgrown lots and boarded-up buildings creep in, and empty houses outnumber occupied ones in some residential areas.
City officials say the city's eroded tax base can no longer support generous public pensions and job benefits approved during better times.
View galleryIn a June 12, 2014 photo in Flint, Mich., a city of …
In a June 12, 2014 photo in Flint, Mich., a city of Flint storm drain is seen on the city's west …
Flint's budget deficit is about $12.9 million, and the city will have to come up with $5 million this fiscal year unless most retirees begin paying more for health benefits and absorb higher deductibles and co-pays, Earley said.
While the bankruptcy risk remains until the case ultimately is settled, the city received a temporary reprieve last week, when a federal judge allowed it to implement cuts for the current fiscal year budget. While city officials expressed relief, "the real fundamental, underlying question about the ability of a municipality to alter retiree health care benefits has not been answered," said Gerald Ambrose, Earley's financial adviser.
Leon Noack, 75, who retired in 1985 as assistant fire chief, said the city is dictating terms with little chance for negotiation.
"I feel sorry for the city that they're in this bind, don't get me wrong. I understand they need help. But the way they're going about it is just not right," said Noack, who said he lives on his $2,200 a month pension.
In Detroit, workers and retirees are voting on a settlement offer before a federal judge reviews the city's reorganization plan this month.
View galleryIn a June 12, 2014 photo in Flint, Mich., a view looking …
In a June 12, 2014 photo in Flint, Mich., a view looking south on Saginaw St. is seen. As Detroit ho …
Among cities in financial peril, "Flint is the obvious one (to watch) right now," said Eric Scorsone, an economist at Michigan State University who has studied municipal insolvency.
Paul Herring, who produces public-access programming including Flint City Council meetings, said cuts to local services and fee increases for water usage, for example, make it difficult for people to stay. City leaders, he said, "want to shrink Flint."
Earley said he has no choice: "It was a lot easier when we had 200,000 people. Now, it's not the same number of people, but it's the same delivery systems. It's just like any other cost passed on to consumers."
Flint's city workers, he added, cannot expect the kind of settlement Detroit workers were offered. Philanthropists kicked in $366 million and the state appropriated $195 million to keep the city from liquidating the collection of the Detroit Institute of Arts.
Flint doesn't have that leverage.
"I don't think they're going to quite have the 'grand bargain' Detroit has," Scorsone said. "Detroit's got everyone's attention. You're not going to get that in Flint. ... It doesn't carry the same resonance nationally."
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Follow Jeff Karoub at https://twitter.com/jeffkaroub |
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Tue Jul 08, 2014 4:05 pm |
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untanglingwebs
El Supremo
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Federal judge: Flint's critical financial condition means city can cut retiree health care
Ron Fonger | rfonger1@mlive.com By Ron Fonger | rfonger1@mlive.com
on July 09, 2014 at 6:50 PM, updated July 09, 2014 at 6:53 PM
FLINT, MI -- A federal judge is allowing the city of Flint to make changes to health benefits for retirees -- at least for now -- after Flint's top financial advisor claimed the alternative could force the city into bankruptcy.
U.S. District Judge Arthur J. Tarnow issued an order June 30, giving Flint the right to change retiree health benefits, modifying a 2013 preliminary injunction that had stopped previous such attempts.
Although city officials have said continuation of the injunction would cost it $5 million in the fiscal year that started July 1, a statement from emergency manager Darnell Earley says, "The city is currently evaluating the impact of the Court's decision on its recently adopted budget."
"The Court's decision to modify the injunction recognizes the negative impact the injunction was inadvertently having on Flint's ability to provide basic services, particularly public safety, and the resulting negative impact on its residents," the emergency manager's statement says.
Tarnow's 11-page decision spelled out minimum levels of deductibles, copays and coinsurance for city retirees covered by various health plans, and said new evidence submitted by Flint, made a convincing case "that a failure to reasonably modify the preliminary injunction will substantially harm third parties and will not serve the public interest."
"Flint has demonstrated that its abilities to raise revenue or cut expenditures is presently severely curtailed," the opinion continued.
Gerald Ambrose, Earley's financial adviser, helped make that case, swearing in an affidavit that retiree health care costs have the potential to leave Flint with "insufficient resources to provide even the most basic city functions."
Flint Mayor Dayne Walling declined to comment on the order, and The Flint Journal could not reach Alec Gibbs, an attorney representing retirees in the case.
City Council President Scott Kincaid said the ruling could have a positive fallout in the new fiscal year.
"If this gives us some relief" on legacy costs, "there could be some substantial savings," said Kincaid, who had not yet reviewed the judge's order.
Earley has called legacy costs a "$5 million burden to expenses of the general fund," and warned in January that the lawsuit that seeks to keep benefits former employees retired with is so expensive it could force the city into bankruptcy.
General fund costs for retiree health care and pension in total had been projected to increase from $16.4 million in the fiscal year that ended June 30 to $21.5 million in the current fiscal year.
Six retirees and the Flint-based United Retired Governmental Employees association filed the initial healthcare lawsuit against the city following an April 2012 decision by former emergency manager Michael Brown.
Brown attempted to require retirees to pay a greater share of their health care coverage.
On Jan. 3, the U.S. Court of Appeals reinstated an injunction, blocking the city from making any changes in coverage while the case is pending, and in his most recent report to the state, Earley said the city "does not have the resources to afford current level of healthcare coverage and projected cost increases for the upcoming fiscal year that are substantial.
"If the federal district court's decision is not reversed, the city will be in an extremely precarious financial position, with insufficient resources to meet basic functions," Earley's report says. "The city will be engaged with others to assess the potential avenues for the city, including bankruptcy, should the city not prevail."
Ron Fonger is a reporter for The Flint Journal. Contact him atrfonger1@mlive.com or 810-347-9963. Follow him on Twitter, Facebook orGoogle+. |
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Thu Jul 10, 2014 7:13 am |
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untanglingwebs
El Supremo
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Moody's analyst: Flint unlikely to follow Detroit into bankruptcy -- unless it loses retiree lawsuit
Ron Fonger | rfonger1@mlive.com By Ron Fonger | rfonger1@mlive.com
on September 15, 2014 at 5:45 PM
FLINT, MI -- Flint and Detroit have many similarities, but bankruptcy isn't likely to be among them, according to an analyst with Moody's Investors Service.
David Levett, writing in the Sept. 11 issue of U.S. Public Finance Weekly Credit Outlook, says Flint is unlikely to follow Detroit's path into bankruptcy in the near term, especially if the courts allow the city to keep benefit cuts to retirees in place.
"While Flint is much smaller, the two Michigan cities share a similar socioeconomic profile, history of industrial decline and deep-rooted financial distress," the report by Levett says. "Yet, largely due to more aggressive state oversight, Flint has made more progress in restoring its financial condition."
Flint emergency manager Darnell Earley said in an email statement Monday, Sept. 15, that the Moody's report "is verification that we have made significant progress in turning the city around."
"It reflects the results of nearly (three) years of dedicated hard work and sacrifice, on the part of a lot of people," Earley's statement says. "We will continue to follow the plans that I have laid out to complete the work yet unfinished, as we look to transition (to local control and a Transition Advisory Board) sometime during the first quarter of next year."
Earley is Flint's third emergency manager since a panel of state officials declared the city in a financial emergency in November 2011.
Earlier this year, Earley himself raised the possibility of bankruptcy for Flint if it loses a lawsuit filed by city retirees, which seeks to maintain the health benefits that workers retired with.
A federal judge in June allowed the city to make changes to those health benefits -- at least for now -- after Flint's top financial adviser also claimed the alternative could force the city into bankruptcy.
The full case is still pending in U.S. District Court.
Levett's analysis credits Flint's emergency managers with having "substantially improved financial operations with dramatic changes, including restructuring pension benefits, outsourcing services, eliminating 20 percent of the city's workforce and reducing total employee compensation equivalent to 20 percent of wages."
He says Flint's financial progress "would be derailed" if cuts to retiree benefits are overturned.
"The city would face substantial financial pressure should the benefit cuts not stand, increasing the likelihood of a bankruptcy filing ... If the city ultimately loses the challenge, annual expenditures would increase by $5 million, equivalent to 8 percent of 2013 revenues," the report says.
Levett says the key economic differences between Flint and Detroit, include:
•The state intervened in Flint earlier than Detroit, giving emergency managers here a 16-month head start, and Flint has achieved "substantial structural reforms outside of bankruptcy."
•Flint's finances have improved, including increased revenue from a voter-approved 6-mill property tax for police and fire services, and it has lower liabilities than Detroit.
•Detroit's population -- seven times that of Flint -- makes it more difficult for outside assistance to be meaningful. For example, when Gov. Rick Snyder awarded $52 million to Detroit and $20 million to Flint for demolishing vacant properties in 2013, Flint was in a position to benefit more from less.
Flint Councilman Joshua Freeman said in an email to The Flint Journal that he's not sure the Moody's report "offers anything new or insightful concerning the current condition of the finances in Flint.
"The EM implemented substantial changes in the city that have brought (the) level of service we provide in line with the revenue we receive," Freeman said.
"What has always been an issue is (fiscal year 2017) and beyond. With the continued decline in revenue, meeting those (retiree) obligations is increasingly difficult to do without substantial changes. Without changes, I see no clear path forward that does not include bankruptcy," Freeman's statement says.
mmmjive
Stealing money from Senior Citizens.
How to run for office as a Snyder Republican.
And dont forget to Suspend Democracy so that the people have.....No Say...No Vote.....
Yeah, Repuiblicans have a plan that Works.....For the Taliban.
bobjgumby
My grandfather retired from the city of Flint ears ago. He only gets about 12,000 a year for him and my grandmother to live on and after the latest proposed changes about 7000 of that would go to pay for their health care leaving them just over 5000 a year to live on. There are real consequences to slashing these benefits.
Davret
Sure put it all on the backs of the retirees. Make them pay more for health care and at the same time make them pay more taxes to the state on their pensions and blame them for all the city's financial woes. What were the retirees supposed to do when the EFM slashed their promised benefits, roll over and take it?
Basic Bob
@Davret Haven't we learned anything? People wishing to neuter the EFM and turn it over to the bankruptcy judge will end up with the same net result - slashed benefits. The city over-promised and under-delivered, as politicians are wont to do. Now they are gone to prison or retired with full benefits and current residents are forced to live in third-world squalor - unsafe water, unsafe streets.
TheStruggle
12 hours ago
Just remember it's election year! He'll say anything to keep his job! Say No to Snyder and the proposals in November! |
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Tue Sep 16, 2014 6:13 am |
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