Detroit— The city’s last remaining major labor union that hasn’t reached a contract deal in bankruptcy was in court Wednesday arguing Detroit’s changes to pensions for the next decade violates its members’ collective bargaining rights.
Christopher Legghio, an attorney for the Detroit Fire Fighters Association, said Detroit’s debt-cutting plan would effectively suspend Michigan’s collective bargaining for the next 10 years and not allow the union to bargain for better pension benefits.
Detroit’s plan to shed $7 billion in debt and long-term liabilities includes new hybrid pension plans for city employees that went into effect July 1. The plans are less generous than past pension plans and require employees to contribute to their retirement accounts.
Legghio argued the bankruptcy court doesn’t have the authority to let Detroit ignore Michigan’s public employee collective bargaining law for the next decade.
“However noble this court’s intent is, you haven’t been licensed to control wages and benefits for 10 years,” Legghio told U.S. Bankruptcy Judge Steven Rhodes.
City attorney Heather Lennox said Detroit’s debt-cutting plan relies upon assuming pension costs will remain fixed or the next 10 years. Allowing unions to bargain for better benefits could destabilize the city’s finances, Lennox argued.
“They’re looking at this through a prism of ordinary bargaining and ordinary times,” Lennox said. “These are extraordinary times in a financial emergency.”
Unions will be free to bargain with city management over other economic issues, Lennox said, just not pensions. “This is not a wholesale suspension of bargaining,” she said.
The collective bargaining dispute is one of several issues surrounding the legality of Detroit’s restructuring plan that Rhodes is holding hearings about this week before an Aug. 14 trial over the plan.
Also Wednesday, Rhodes heard arguments from attorneys for Oakland, Macomb and Wayne counties on why suburban leaders believe they have legal standing to object to Detroit’s Plan of Adjustment as an interested party.
Oakland and Macomb counties have been aggressively objecting to the city’s plan to extract $428 million in accelerated pension payments from the Detroit Water and Sewerage Department during the next decade.
Suburban leaders argue the higher pension payments for Detroit’s legacy costs will ultimately be passed on to ratepayers in the form of higher water bills, leaving less money for infrastructure improvements.
“We have the standing to make those objections,” Oakland County attorney Joseph Fischer said.
Detroit’s attorneys contend the suburbs can’t object to the plan because the DWSD is not in default on any contract to provide water and sewer services to suburban communities.
“I get the history and I get the bad blood and I get the suspicions, but the fact of the matter is DWSD is on the right course,” Lennox said.