July 15, 2014 at 6:22 pm

Detroit residents plead with judge to keep pensions, benefits intact

Detroit — Almost four dozen retirees and Detroit residents urged the city’s bankruptcy judge Tuesday to spare pensions and health care benefits from being cut, as one accused Emergency Manager Kevyn Orr of “slitting our throats and letting us bleed out.”

Testimony from 46 people who have objected to the city’s debt-cutting plan tried to humanize the impact pension and health care cuts would have on their lives during a rare bankruptcy hearing with public testimony.

The hearing injected drama into the normally staid bankruptcy case and gave U.S. Bankruptcy Judge Steven Rhodes another intimate look at how the biggest municipal bankruptcy case in U.S. history is affecting residents and former city employees.

Retired police Sgt. Gisele Caver’s voice quivered and she fought back tears while telling the judge how she worked despite suffering from an incurable disease and now faces cuts she can’t afford.

“I want to live the last few years of my life,” she said. “Don’t take away my pension and my medical. My life is at stake.”

The testimony came less than one month before Rhodes is scheduled to preside over a trial that will determine whether Detroit can implement the debt-cutting plan, known as a plan of adjustment.

“It was highly informative and will help me make what I hope will be the right decision regarding the city’s plan of adjustment,” Rhodes said.

Under the plan, past and current city workers would get a base pension cut of 4.5 percent and the elimination of annual cost-of-living increases, while police and firefighter pensioners would see their 2.25 percent annual cost-of-living-adjustment reduced to about 1 percent.

Detroit also wants to recoup up to $239 million from general system retirees whose optional annuity savings accounts were credited with interest earnings that exceeded the retirement system’s actual investment returns. Retirees contributed 3, 5 or 7 percent of their paychecks to the savings fund, which is separate from their lifetime pension benefits.

Some 12,000 members of the retirement system face reductions in their monthly pension checks of up to 15.5 percent through the annuity savings fund recoupment, known as a clawback.

Rhodes vowed to carefully consider the testimony, which came four days after the deadline for retirees and other creditors to vote on the city’s plan to shed $7 billion in debt by cutting pensions, health care obligations and money owed to bondholders, banks and other creditors.

“Your input is extremely important in this process,” Rhodes told the crowd. “This is obviously a matter of great importance to you and everyone in the city, so what you have to say is important and will be given all of the respect it is entitled to.”

One objector, Detroiter Jo Ann Cooper, questioned the city’s financial condition.

“I do not believe the city of Detroit is broke,” she told the judge. “I have no proof of it. There have been a lot of lies over the years.”

The bankruptcy was prompted by more than 50 years of neglect and corruption and decline, Detroit’s bankruptcy lawyer Heather Lennox told the judge.

“We are hoping at the end of this process to provide better services in a revitalized city,” Lennox said. “We recognize the profound effect this process has had and will have on employees’ and retirees’ lives.”

The testimony Tuesday is a good reminder “that the city is comprised of people,” she added.

Rhodes will preside over a trial starting Aug. 14 and decide whether Detroit can implement the debt-cutting plan. If confirmed, Detroit would cut pensions, an unprecedented move that has been fought by retirees who thought the state constitution protected those benefits.

On Tuesday, objector Audrey Bellamy told Rhodes the bankruptcy is really about “the death of the middle class.”

Retired Detroit bus driver Jesse Florence Sr. said he and his wife cannot afford pension and health care cuts.

“I never thought I would be struggling to get health care,” he told Rhodes.

“This is devastating. We have other obligations.”

Detroiter Andrea Hackett portrayed the city’s bankruptcy as a “well-planned, corporate, hostile takeover of Detroit.”

The purpose of the city’s bankruptcy “is to shed pension obligations and get this court and judge to set a precedent so other cities can do the same,” Hackett said. “Orr has no problem slitting our throats and letting us bleed out.”

rsnell@detroitnews.com
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