Detroit’s labor unions want their fair share from the bankrupt city of Detroit: an extra month’s pension check every year. This policy of redistributing people’s wealth started in 1985 and was stopped in 2008 after costing taxpayers an additional $1.92 billion. How much is our “fair share”? How much blood can you get from a rock?
Detroit’s bankruptcy judge should allow a state employment panel to reinstate a pension program that gave an extra check to retirees every year using excess earnings, a city union said in court papers.
Before it ended in 2011, the policy of issuing a “13th” check and related payments cost the city $1.92 billion from 1985 to 2008, according to a report commissioned by the city. Before the Michigan Employment Relations Commission could consider restoring the checks, the city filed for bankruptcy, putting the issue on hold, according to court records filed Sept. 24 in U.S. Bankruptcy Court in Detroit.
The city allowed the pension board to give out an extra check almost every year for so long that the payment became a right that couldn’t be revoked unilaterally, according to a ruling by Doyle O’Connor, an administrative law judge with the commission.
“A practice that continues for three decades is a tacit agreement,” O’Connor said in an oral ruling in February. The city should have negotiated the change with the union as part of a new employment contract.
Detroit has said its biggest unsecured debt is an unfunded pension liability of $3.5 billion. The city also owes about $1.4 billion on bonds it issued to bolster city employee pension systems.