From The Sacramento Bee:
In a case with significant implications for public pensions in California, the bankrupt city of Detroit proposed slashing retirement benefits by up to 34 percent in a plan unveiled Friday.
The city, which is $18 billion in debt, would cut pensions 10 percent for retired police officers and firefighters, and 34 percent for other municipal retirees as it tries to resolve the largest municipal bankruptcy in American history. Unsecured creditors would receive about 20 percent recovery, in the form of new securities issued by the city.
Detroit’s plan is being closely watched in California, where two cities are trying to exit bankruptcy and other cities are facing financial stress over rising pension costs. The city of San Bernardino has hinted that it might try to reduce its $24 million-a-year bill to CalPERS, although it hasn’t yet filed a reorganization plan. Last fall the city of Stockton proposed a bankruptcy plan that leaves pensions untouched but restructures much of its bond debt.
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