Retired Detroit firefighter: "My pension is what I was promised"

[Yo_Mama]

41. No, protection of pensioners and wage earners remains under the law

That doesn't mean pensions won't be cut. The BK court's mission is to divide up assets and cash flows fairly under the law to creditors.

If there isn't sufficient money to pay the pensions, they may be cut.

You have to realize that the ability to raise taxes in Detroit is limited, at best. Take a look at these stats:
http://www.mlive.com/news/detroit/index.ssf/2012/09/detroit_has_half_the_median_in.html

And a literally broader view:
http://www.eurasiareview.com/21072013-detroit-and-the-bankruptcy-of-americas-social-contract-oped/

If you raise taxes too high, the tax base will continue to decline. Detroit has to reach a point at which people and businesses can "buy in", and to accomplish that extra funding to develop businesses, etc, will probably be needed. But the population is dropping fast, so the task is difficult.

People don't have money so property tax collection rates are abysmal:
http://www.detroitnews.com/article/99999999/METRO/130221002

Trying to increase income taxes isn't going to do much - you can't collect much income tax from a population base with median household incomes somewhere around 26K. Half the kids in the city are considered to be living in poverty.

More stats from Ezra Klein:
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/19/detroits-pension-problems-in-one-chart/


It's probable that there will finally be some cuts to pensions, but any such cuts will occur after losses have been distributed to bondholders. Many bondholders may take close to total losses.

One open question are dedicated-funding bonds, for which the bonds were originally sold as having a dedicated funding stream from a certain revenue source. That will be hashed out in court.