when a debtor is without the means to pay their just financial obligations, then bankruptcy provisions are established just for such a circumstance
here is a clue - one lost on many others, too - the chapter 9 bankruptcy rules are already established, for instances such as this
such need for a municipality to file for bankruptcy was anticipated
and in bankruptcy actions, there are different tiers of creditors. THAT is what this is about
and if the provisions of the STATE constitution stand up in a FEDERAL bankruptcy court, the pensioners owed their retirement income by the city of detroit will receive their payments in full
and if there is not enough money to pay every other creditor in full - as is expected - some (probably most) of them will have to settle for pennies on the dollar. unsecured creditors will probably not receive those pennies
now come back and make another stupid post that does not advance this debate an iota; it has now become an expected "feature"
i was a government worker
what i said applies to federal and many state and municipal workers, who agreed to accept less than comparable market rate pay today for a better retirement tomorrow
try again. you will need a much better argument than the one i just flushed
no, the government workers agree to a compensation package. one that accepts often less than market wages today for a pension benefit that will be due upon fulfilling the requirements to become vested in the retirement systemThe people must all pay higher taxes so people on their pension can do squat and still get paid. This arrangement is part of the states constitution putting a constitutional obligation on the people to pay the pensions of others.
now, prudent fiscal policy would tell the government leaders that the appropriate thing to then do is place the wage savings into a sinking fund to cover future retirement costs
but too many states and municipalities - like detroit - underfunded the retirement system to cover those pension payments when they became due
which is why the state's constitutional provision is so prescient. it is intended to prevent the pensioner from being hurt by such poor fiscal governance as is evident in detroit