An emergency manager being introduced this afternoon is a step toward a historic inevitability, Detroit News business columnist Daniel Howes believes.
The governor's 2 p.m. announcement at a Cadillac Place news conference in Detroit "is likely to be a precursor to the ignominy of being the largest city in American history to go bankrupt" Howes writes.
Kevyn Orr, a Washington, D.C., attorney, is widely reported to be Snyder's pick for emergency financial manager. The news conference will be livestreamed here at the state's website, as well as aired by at least some local news stations.
Howes explains why a limit on Orr's authority makes a Chapter 9 bankruptcy filing seem unavoidable:
Only a federal bankruptcy judge is empowered to order sweeping changes to dangerously underfunded pension funds covering police, fire and municipal retirees. . . .
The city's General Retirement System . . . is just 32-percent funded, according to individuals familiar with analysis conducted for the city by an independent consultant. For the Police and Fire Retirement System, the corresponding funding level is 50 percent, in both cases substantially less than officially reported by Detroit.
The columnist quotes MSU economist Eric Scorsone about what's probably coming:
"If the moderate- to worst-case scenarios are true, then I don't see how Detroit avoids bankruptcy. . . Even an emergency manager wouldn't be able to touch pensions. You'd be talking about hundreds of millions that would need to be paid into those pension funds."
Howes ticks off other hard realities that Orr will confront.
