Late last night, Detroit passed a vote on an agreement that will help city get out of the bankruptcy they filed for a year ago. Workers and retirees in the economically damaged city have voted in favor of pension changes as part of the plan to reduce municipal debt. This comes just several weeks before a trial begins to end the largest public bankruptcy filing in U.S. history.
The pension change is actually a pension cut, and while there was previous backlash, it was passed with a vast majority. The pension cut for general retirees is 4.5 percent, and they also lose annual inflation adjustments. Still, this was approved with 73 percent in favor. For retired city firefighters and police officers, they will lose only part of their annual inflation adjustment. About 82 percent of this group voted in favor of the cut. The votes took place over 60 days and was organized by a private company.
The votes will give the judge in the trial, Judge Steven Rhodes, greater insight into Detroit's debt reduction strategy. The judge has $18 billion in long-term debt to consider. This vote triggers an $816 million bailout from the state, local foundations, and the Detroit Institute of Arts. It will also aid in preventing the sale of the city's art collection. However, this is all still pending the judge's agreement on August 14.