Detroit Emergency Manager Kevyn Orr's fight to fix Detroit's finances is getting much more complicated.
Robert Snell and Chad Livengood report in The Detroit News that city pension officials are planning to escalate a fight over a possible takeover of the city’s retirement systems with a lobbying blitz and may join forces with retirees who are trying to block Gov. Rick Snyder from authorizing the biggest municipal bankruptcy in U.S. history.
In a related development, Snell reports Monday morning that Orr appears to have reached what is being called an "important settlement" with creditors, though few details were immediately available.
The city’s Police and Fire pension fund last week authorized its law firm to take any necessary steps to protect a system with $3 billion worth of assets and counter Emergency Manager Kevyn Orr’s contention that the city’s pension funds are underfunded by an estimated $3.5 billion.
"The moves mark an escalation in tension between the pension fund and Orr, who wants to slash pensions and health benefits as part of his plan to restructure as much as $20 billion in city debt. The behind-the-scenes moves also indicate pension officials are dipping into a $5 million fund created to fight Orr.
“We gave our attorneys the go-ahead to take whatever legal action is necessary,” said Mark Diaz, a trustee of the Police and Fire Retirement System. “We have to look out for the best interests of the pension system.”
Snell and Livengood write the fund might join two lawsuits filed last week in Ingham County. One lawsuit filed by current and retired city workers seeks to block Snyder from authorizing a Detroit bankruptcy filing. The state Attorney General’s Office has until today to respond to the workers’ request for a restraining order against Snyder.
The pension fund isn’t alone in looking at the lawsuit as an option to block a Detroit bankruptcy filing. Several labor unions are interested in joining the lawsuit, said Bingham Farms attorney Bill Wertheimer, who represents several retirees through the United Auto Workers.
