This summer, Detroit is gearing up for its most important vote in years. It’s not the mayoral election—that happened last year—nor is it for city council. In fact, most of the citizens won’t even get to vote. Instead, this week, ballots are being sent out to the roughly 32,000 members of Detroit’s pension system, asking them whether they want to accept the deal the city made with the funds last month, or whether they want to reject the deal and take their chances with the courts. Plan participants will have two months to vote, and the ballots will be counted in mid-July.As the New York Times notes, the stakes are high, both for the plan participants and for the city as a whole. If the pensioners agree to the deal, they will have to accept modest yet significant cuts in their benefits and they will forfeit their ability to challenge the city’s bankruptcy plans in court. If they reject the deal, they can still challenge the city’s plans in court, but they also stand to lose over a quarter of their benefits if things go poorly, as recent precedents suggest it might.Detroit has spent months hammering out a plan in which nonprofit foundations and the state government would give the city over $800 million and allow the Detroit Institute of Arts to remain in the city. If pensioners vote no, however, this deal could fall apart and the city will be back at square one when it comes to raising funds and climbing out of bankruptcy.Representatives of many of the pension funds are supporting the plan, but it’s still far from clear whether the pensioners will vote to cut their own benefits. Either way, the results could have a major impact on the future of the city, and this vote will be one to keep a tabs on over the next two months.
Pension WarsDetroit Gears Up for Major Pension Vote