Detroit's Bankruptcy: the Pension Issue

Judge Rhodes ruled yesterday that the city's bankruptcy can proceed. He also ruled that the state constitutional provision that protects state employees' pensions from being diminished or impaired is preempted by federal law. Appeals will be filed, but the bankruptcy will move forward. Judge...

Detroit Bankruptcy Ruling Imperils Pensions

by Korey Clark This month the federal bankruptcy court judge presiding over Detroit's bankruptcy case, ruled that the city's public pensions were not untouchable, even though they are expressly protected under Michigan's Constitution. "Pension benefits are a contractual right and...

Heard About Detroit? The First Word on Treatment of Public Employee Pension Benefits in Chapter 9 (And Absolutely Not the Last)

by Ben Feder The recent ruling by Judge Stephen Rhodes finding the City of Detroit eligible for protection under Chapter 9 of the U.S. Bankruptcy Code has rightly received considerable attention. The determination that Detroit has met the standards under Section 109(c) of the Bankruptcy Code to be...

State Net Capitol Journal – February 3, 2014; States Debate What To Do With Tax Windfalls

Budget & Taxes STATES DEBATE WHAT TO DO WITH TAX WINDFALLS: Rising tax revenues — and election-year considerations — are ratcheting up debate in state capitols over whether to cut taxes, restore spending eliminated during the recession or fund new programs. Although the debates...

Michigan Governor Wants to Open Bankrupt Detroit to World

Last month Michigan Gov. Rick Snyder (R) unveiled a plan to help revitalize bankrupt Detroit: issue special visas to lure highly skilled immigrants to the city, or as he put it, send the message that "Detroit is open to the world." The city's population has plunged by over 1 million since...

Detroit’s Proposed Plan of Adjustment – Two Crucial Questions

by Ben Feder The chapter 9 bankruptcy case of the City of Detroit has been as complex and litigious as anticipated . Nevertheless, Emergency Manager Kevyn Orr has kept plodding forward, and last week filed a proposed plan of adjustment , the road map for the Motor City to emerge from bankruptcy. There...

State Net Capitol Journal – June 9, 2014; Florida Hurricane Bonds On Rise

Budget & Taxes FL HURRICANE BONDS ON RISE: Six years ago, Florida's government-run property insurer, Citizens Property Insurance Corp., paid Warren Buffett's Omaha, Nebraska-based Berkshire Hathaway Inc. $224 million in exchange for a guarantee that the company would buy bonds issued by...

Michigan Lawmakers Approve 'Grand Bargain'

Michigan lawmakers have given their approval to the bankruptcy exit plan negotiated by federal mediators that has come to be known as the "grand bargain." The nine-bill package, passed with bipartisan support in both chambers and expected to be signed by Gov. Rick Snyder (R), calls for the...

State Net Capitol Journal – July 14, 2014; Federal Highway Funding Bottleneck Forces States To Hit Brakes On Road Projects

Budget & Taxes FEDERAL HIGHWAY FUNDING BOTTLENECK FORCES STATES TO HIT BRAKES ON ROAD PROJECTS: With the specter of an empty federal Highway Trust Fund looming, states — which count on that fund for 15 to nearly 60 percent of their transportation budgets (see Bird's eye view) —...

Stockton Judge: Pension Obligations Are Not Impervious to Impairment In Chapter 9 Bankruptcy. What Comes Next?

by Ben Feder The perception that public employee pension obligations cannot be impaired in bankruptcy suffered a damaging blow several months ago in the City of Detroit bankruptcy case , and has now been fatally wounded by the recent ruling of Judge Christopher Klein in the Chapter 9 case of Stockton...

Despite Earlier Ruling, Stockton Judge Confirms Plan Leaving Pension Obligations Intact

One month ago, Judge Christopher Klein ruled in the city of Stockton, CA bankruptcy case that public employee pension obligations can be impaired in municipal bankruptcy cases under Chapter 9 of the Bankruptcy Code. Last week, however, Judge Klein approved the plan of adjustment for Stockton that left...