Detroit still has the largest municipal bankruptcy in U.S. history. In 2013, the city was deep in debt – $18 Billion, $11 Billion unsecured.
Five years ago on July 18, I stood at the door of city hall to tell you the breaking news heard around the world. It was a wild ride.
“Nobody was really sure where the bottom was before that happened,” says Rebecca Salminen Witt from the Detroit Historical Society.
Detroit was broke and trying to operate with broken down police cars, fire trucks ambulances, and busses. We were shocked to learn during bankruptcy that at some fire stations alarms came in on paper on fax machines that would knock over pop cans. The address of the fire was on the paper.
Detroit was a very dangerous city.
“Five years ago, response times were over an hour,” recalls Police Chief James Craig.
Police officers were hit with 10 percent pay cuts while working 12-hour shifts and stagnant with nobody promoted up the ranks. Neighborhood cops were gone.
By winter, the cold hard truth became clear – Detroit needed to cut Billions. It was a painful process in and outside of court. Retirees facing cuts in their twilight years in pensions and what was guaranteed heath care. They turned their collective voices into a small city inside the big city, “affecting 23,500 retirees,” I reported on live TV.
Their attorney told us, “They’re proposing an 87% reduction in health care coverage. Can you imagine what that means?”
The so-called Grand Bargain was crafted to save a precious city asset – the Detroit Institute of Arts collection of masterpieces that creditors were hungry to sell off and to help retirees.
“It’s $350 million from the state, $350 million from foundations to save DIA art and soften pension cuts,” I reported several times throughout the ongoing coverage.
The bankruptcy only happened because Detroit was under a state takeover. Governor Rick Snyder appointed an emergency manager to run the city. His pick, Kevyn Orr, just happened to be a bankruptcy attorney.
“What needed to be done for the city to get its finances back on track had not been done through the political process,” says Sandra Svoboda with WDET Radio.
Retirees are still paying for Bankruptcy and can be bitter. Louie Bennett is a retired police officer and was a protester on the street with his wife Patti. They’ve now been married 43 years and he says they can’t afford a vacation with his monthly health care costs that come out of his reduced pension.
“It eats away at you pretty bad and you’re just an old guy, bitter guy and you don’t want to do that,” Bennett said.
So while Detroit continues a comeback from rock bottom, bankruptcy is not over for retirees.