The future of Detroit's pensioners at stake

Updated: Saturday, August 3, 2013
The future of Detroit
KALAMAZOO, Mich. (NEWSCHANNEL 3) - It's a question financially troubled cities all over the U.S. are going to be paying close attention to, as Detroit tries to figure out who gets what in the wake of its declaration of bankruptcy two weeks ago.

What happens to the city's pensioners--those 23,000 people, with more to come--who rely on their monthly checks for survival?

Tom Van Howe has more in tonight's edition of Tom's Corner.

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When we on this side of the state think about Detroit, it's all too easy to remember the excesses and the decades of perceived political obstinacy flaunted by its leaders.

From individual limousines for school board members to the costly criminal behavior of former Mayor Kwame Kilpatrick.

We tend to think, 'Well, you guys created the mess you're in; you let it happen. You fix it.'

And by virtue of the deafening silence from Lansing and Washington on the issue of bailouts, we aren't alone.

But none of the 23,000 former city workers who rely on pensions now, nor any of the 9,000 or more who will be retiring someday with pensions as a key ingredient to their plans for a secure retirement had anything to do with the mismanagement that resulted in where things stand today.

They were police officers, firemen, linesmen, secretaries and so on. They worked for the city and as part of the package was the promise of retirement income. And its not as though the payouts are exorbitant. Police and fire: $30,000 a year.

Other city employees: about $19,000. Not enough to live a life of leisure with exotic vacations three times a year. But, its enough to help them live their lives with dignity.

And more than anything else—it was promised to them.

So now the city of Detroit may try to take that promise back.

The city owes a mind-bending $20 billion. It's trying to find ways to settle those debts for pennies to the dollar, but it would be an ethical blunder to do the same to pension recipients.

Detroit's Emergency Manager, Kevyn Orr, says the long-term pension liability is about $3.5 billion. And according to news reports, the city was a hundred million dollars short on its contribution to the pension fund.

Last year alone. Again—that's not the fault of the pensioners.

Attorney General Bill Schuette has jumped into the fray pledging to  defend the pensioners' constitutional right, under state law, to receive what they have coming. If Schuette is successful in making that argument stick, he'll become a hero to lot of people who have, perhaps, never heard of him.

But whether it remains merely a moral obligation, or an ironclad legal one; it's crystal clear the city of Detroit doesn't have the money.

And that means its going to fall to us—to you and me—the State of Michigan, to help make good on a multi-billion dollar promise the city of Detroit, on its own, cannot keep.

Why? Because, at the bottom line, we're all in this together, and  it is the right thing to do.

In this corner...I'm Tom Van Howe.

Business News

Last Update on December 22, 2014 08:26 GMT

ECONOMY-THE WEEK AHEAD

WASHINGTON (AP) -- This is a shortened trading week with the stock and bond markets closed on Christmas Day.

However, there are some interesting government economic reports being released ahead of the holiday.

Today, the National Association of Realtors will report on how many existing homes were sold in November.

On Tuesday, the government will report on last month's new home sales, as well as November's durable goods numbers and personal income and spending for November. It will also report the third-quarter gross domestic product

This week, the government will be releasing last week's jobless claims number a day early, on Christmas Eve. Also on Wednesday, Freddie Mac will report this week's mortgage rates.

SKOREA-ECONOMY

SEOUL, South Korea (AP) -- South Korea has lowered its growth forecast for next weak citing the persistently weak sentiment among consumers and businesses.

The finance ministry said Monday that Asia's fourth-largest economy will expand 3.8 percent in 2015. Six months ago, it forecast 4.0 percent growth.

The downward revision, representing some improvement from 3.4 percent growth this year, shows the government's challenge in encouraging consumers to spend more and businesses to boost investment despite its expansionary policies and the central bank's two rate cuts this year.

Director-General Lee Chanwoo said the recovery in consumer spending and capital expenditure remains weaker than expected in the last two months.

Lee said consumers and businesses still have great uncertainties about next year and the last quarter's improvement in the economy stemmed mostly from the government policies.

SAFEWAY SALE-HAGGEN

BELLINGHAM, Wash. (AP) -- The Washington state-based grocery chain Haggen Inc. plans to buy 146 Albertsons and Safeway stores in Washington, Oregon, California, Nevada and Arizona.

The Bellingham Herald reports the sales are required under the federal review of Safeway's sale to an investment group that owns Albertsons.

If Haggen's plans announced Friday get Federal Trade Commission approval, the Bellingham-based company would expand from 18 stores and 16 pharmacies in the Northwest to 164 stores and 106 pharmacies in the five states.

Details of the deal haven't been released.

This is the largest of several sales related to the $7.6 billion sale of Safeway to investors led by Cerberus Capital Management. Associated Food Stores is buying eight stores in Montana and Wyoming, Associated Wholesale Grocers is purchasing 12 stores in Texas, and Supervalu is buying two Albertsons stores in Everett and Woodinville, Washington.

GAS PRICES

CAMARILLO, Calif. (AP) -- The average price of regular gasoline nationwide has dropped another 25 cents a gallon in the past two weeks, to $2.47.

Industry analyst Trilby Lundberg said Sunday that prices will likely keep falling.

Lundberg says the average price of regular gasoline is the lowest it's been in more than five years.

She says lower crude oil prices are driving prices down, along with an abundant oil supply and the rising value of the U.S. dollar.

The highest-priced gas in the Lower 48 states was found in Long Island, New York, at $2.82 a gallon. The lowest was in Tulsa, Oklahoma, at $2.06 a gallon.

California's lowest average was in Sacramento, at $2.58 a gallon.

The average price for midgrade gas in the U.S. is $2.71. For premium it's $2.87.

MINE EXPLOSION-INSPECTIONS

LOUISVILLE, Ky. (AP) -- Deaths and injuries at the nation's coal mines have been declining since a West Virginia underground mining disaster killed 29 workers less than five years ago.

Coal mines are on pace this year to set a new low mark in mining deaths. So far in 2014 there have been 15 coal mine-related deaths, and with less than a month left in the year, the number could stay below the record 18 set in 2009.

Federal mine safety officials say increased enforcement efforts since the Upper Big Branch mine explosion in 2010 have improved the safety at all the nation's mines. Assistant Labor Secretary Joe Main says officials focused on making coal mines safer after the West Virginia tragedy.

MIDEAST OIL

ABU DHABI, United Arab Emirates (AP) -- Saudi Arabia's oil chief is dismissing allegations that his kingdom conspired to bring down oil prices in order to harm other countries and told a summit of Arab energy leaders that he was confident the market would stabilize.

The kingdom, which is dependent on oil revenues, is able to weather lower oil prices due to large reserves built up over the years. Non-OPEC member Russia and other nations like Iraq, Iran and Venezuela need prices substantially above present levels to meet budget goals and want to drive prices up.

Saudi Arabia maintains it is opposed to cutting production because of fears its market share could erode.

The price of U.S. crude has dipped below $60 a barrel, its lowest in five years. Naimi said he was certain that the oil market would recover with the improvement of the global economy.

An OPEC meeting last month failed to agree on production cuts, mainly because of Saudi opposition to curb its own exports. OPEC controls about 40 percent of the world oil market and Saudi Arabia is the cartel's largest producer.

DISH NETWORK-FOX BLACKOUT

NEW YORK (AP) -- Dish Network subscribers were unable to watch Fox News Channel and the Fox Business Network on Sunday when the channels were taken down as part of contract negotiations.

The Fox blackout is just the latest skirmish as cable and satellite TV providers fight with networks over subscription fees. Dish Network just settled disputes that led to the temporary blackout of some local CBS stations and a separate blackout related to Turner Broadcasting channels -- including Cartoon Network, CNN, Boomerang and Turner Classic Movies.

Dish has more than 14 million satellite TV customers.

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