But one year ago, I remember watching news reports as the governor of my home state, Rick Snyder, emerged from police barricades after signing the so-called “right to work” bill into law in Michigan.
The whole thing was like a bad dream. Gov. Snyder had said for years that so-called “right to work” — restrictions on union dues aimed at weakening workers’ voices at the workplace — was not on his agenda. Then on December 6, 2012, he changed course, and called on the legislature to pass “right to work.”
With lightning speed, the Republican-controlled legislature went to work. There were no committee hearings, highly unusual for a major bill like this. The bill text was almost identical to an ALEC model bill, but that didn’t seem to faze the legislators.
On December 11, as more than 12,000 Michigan workers raged outside the state house, the bills for both public and private sector workers are passed despite bipartisan opposition, and Gov. Snyder had signed them into law by evening.
That was not a fun day.
After that fight, Working America pledged to continue the fight in Michigan and we have.
December 11, 2012 was a rough day. But we know what it takes to win in Michigan: hold leaders accountable for their votes, mobilize a team of activists in communities across the state and support candidates that stand with working families.
The assault on my home state hasn’t stopped there. Gov. Snyder, the Republican-controlled legislature, and emergency managers like Detroit’s Kevyn Orr continue to impose a narrow, corporate-friendly agenda on Michigan without regard to the lives and livelihoods of Michigan’s working families.
With your help, we can fight back against the extreme agenda that Gov. Snyder has pushed through and make Michigan the state we all know and love again.
We’ve seen a lot of things we value come under attack in Michigan lately, but we don’t have to stand for it. With your help, Working America can make a difference in Michigan. Help us fight back now.
As the story goes, the city of Detroit went bankrupt because of $18 billion in long-term debt, in large part caused by pension and health care benefits. A new report, written by Wallace Turbeville and released today from Demos, says that narrative is inflated, inaccurate and irrelevant to explaining the city’s bankruptcy.
Despite what the city’s emergency manager Kevyn Orr, who was hired by Gov. Rick Snyder (R), says, the $18 billion figure is not relevant to the city’s bankruptcy. To emerge from the bankruptcy, according to chapter 9 of U.S. bankruptcy code, Detroit only needs to address its cash flow shortage, a number that even Orr sets at only $198 million. But that number, much like the $18 billion number, is inflated because it goes with extremely aggressive assumptions for economic trends that are very unlikely to represent what really happens.
When projecting costs, governments often create several projections, often reflecting best-case scenarios, worst-case scenarios and some moderate position in between those two. Governments usually choose the moderate option in order to determine their budget projections. But Orr, Turbeville says, has chosen the worst-case scenario and isn’t at all based on a certain liability that the city will face. Furthermore, Orr includes in that total nearly $6 billion of debt from the Water and Sewage Department debt as city liability, despite the fact that this liability is based on an area much broader than the city. The department covers 3 million people in southeastern Michigan, not just the slightly more than 700,000 people who actually live in Detroit.
Turbeville notes that the city’s operating expenses have declined by 38% since the beginning of the Great Recession. During that same time, the city’s pension obligations only rose by $2 million. Health care expenses increased by 3.25%, less than the national average of 4%. The biggest proportion of increased costs for the city actually comes from debt service and financial expenses related to complex Wall Street investments that amounts to more than pension and health care increases combined. Other key components of the city’s deficit are:
A significant decline in revenue based, in large part, on the city’s declining population, which contributed to declines in tax revenue and property values.
A decline of $67 million in state revenue sharing with the city.
As much as $20 million annually in corporate subsidies that have provided questionable benefits to Detroit.
The report concludes:
Detroit’s bankruptcy is, at its core, a cash flow problem caused by its inability to bring in enough revenue to pay its bills. While emergency manager Kevyn Orr has focused on cutting retiree benefits and reducing the city’s long-term liabilities to address the crisis, an analysis of the city’s finances reveals that his efforts are inappropriate and, in important ways, not rooted in fact. Detroit’s bankruptcy was primarily caused by a severe decline in revenue and exacerbated by complicated Wall Street deals that put its ability to pay its expenses at greater risk. To address the city’s cash flow shortfall and get it out of bankruptcy, the emergency manager should focus on increasing revenue and extricating the city from these toxic financial deals.
Detroit public workers have already made sacrifices to keep the city afloat, including a $160 million in annual savings from a 10 percent pay cut, health benefit reductions, and a 40 percent cut in future pension benefits, Orr is making public worker pension cuts a key part of Detroit’s restructuring.
Remember, Orr was appointed by Gov. Snyder to be “emergency financial manager,” a position that does not answer to voters yet can overrule any local elected official. Michigan repealed the governor’s ability to appoint such managers in 2012, but Snyder and the legislature simply passed the law again.
My name is Donald Smith and I worked for the city of Detroit for more than 29 years.
Over close to 3 decades of service to the city earned me a pension of about $800 a month. After taxes and health care expenses are taken out, I am left with very little money each month to pay my rent, buy groceries and to cover my medical prescriptions.
Because of your decision to force Detroit into bankruptcy, I am starting to wonder which of my basic I needs can live without. I did not bankrupt Detroit – in fact, I went to work every day to make it a better place to live. So I can’t understand why you would ask retirees like me to give up the pension benefits we earned.
If you believe that we can afford to make do with less, then you must not know us. That’s why I want to invite you to my home so you can get to know me and see what life is like for retired city employees. I hope you’ll join my family for dinner and hear what really matters to us in Detroit.
We are willing to work around your busy schedule. We look forward to sharing a meal and our perspective with you.
Smith gets $800 a month from his public pension and $1,000 a month in Social Security. “Sometimes I have to make up my mind between getting my medicine and food,” he told WXYZ.
My grandfather spent 20 years of his life working in a Detroit factory.
He worked hard for what he earned. He trusted that sacrificing some of his pay to invest it in a pension would pay off after years of hard work. So that’s what he did. He retired, and his pension allowed him to provide for himself and my grandmother.
He and his coworkers knew that the pensions that they invested in were a valuable part of their income, not just a handout from their employer.
Right now, in Detroit, Emergency Financial Manager Kevyn Orr doesn’t see pensions the same way.
A quick review: In 2011, Gov. Rick Snyder and his allies in the Republican-controlled legislature passed a bill allowing entire cities to be taken over by “emergency financial managers.” These EFMs, appointed by the governor, were allowed to completely overrule decisions made by local elected leaders.
What Orr isn’t saying is what these workers sacrificed to protect their pensions. They accepted pay cuts, health insurance cuts and cuts to future pension benefits just to guarantee that the pensions they had worked a lifetime for would be there for them when they retired.
This is unacceptable, and we need to do better.
We can’t allow the wealthy elite like Snyder and Orr to take away hard-earned income from working families. Workers like my grandfather worked, saved, and sacrificed for years to make sure their pension would be there. It’s not a piggy bank for Orr and his rich friends to play with.
Last summer, the Supreme Court ruled that states could reject federal funds to expand Medicaid under the Affordable Care Act. And until recently, it seemed that Michigan would be one of them.
But then something incredible happened. You started to speak about how unacceptable it was that the poorest of Michigan’s residents, an estimated 470,000 people, would needlessly lack access to health care. You started to ask why Michigan would miss out on millions of dollars every day in Medicaid funds just so legislators could look tough in their opposition to President Obama. Over 7,000 people signed our petition to Gov. Rick Snyder and the legislature, and even more Michiganders called, wrote, and rallied for Medicaid expansion.
This didn’t happen by accident. We’ve been through enough battles to know that politicians don’t do the right thing on their own, especially when it involves going against members of their own party. It happened because you demanded it. This is a victory you won, and hundreds of thousands of people in Michigan are going to benefit from it.
We’ll keep holding Michigan lawmakers accountable. In the meantime, we’re gearing up to make sure everyone in Michigan knows their rights and opportunities under the Affordable Care Act.
In a humorous treatment of a serious subject, AFSCME is using GIFs—those ubiquitous, short animated photos—to tell the story of Detroit’s bankruptcy.
Featuring goofiness from cat boxing, to “Seinfeld’s” Newman, corgis on a treadmill, Eminem’s out-of-it halftime interview with Kirk Herbstreit and Brent Musburger and 20 more, GIFtroit outlines the facts behind Detroit’s bankruptcy, including Gov. Rick Snyder’s (R) hijacking of state revenue due Detroit, his financial “martial law” edict that strips cities of the power to govern themselves, Wall Street’s role and more.
GIFtroit also explains how more than 21,000 city retires are threatened with pension and health care benefit cuts while current city workers, including firefighters and police officers, face wage, benefit and job cuts.
While retirees and workers are the targets of the budget-gutting advocated by Snyder’s appointed “emergency financial manager,” Kevyn Orr, GIFtroit points out that Orr is:
Living in a taxpayer-funded hotel penthouse suite, spending extravagant amounts on room service and hiring assistants at $225,000 salaries.
AFSCME and other Detroit unions are challenging the city’s claims in U.S. Bankruptcy Court, and Judge Steven Rhodes is expected to rule on the city’s eligibility for bankruptcy protection later in the fall. Today, more than 100 Detroit workers, retirees and residents who filed objections to the bankruptcy are getting a chance to speak out before Rhodes.
The Michigan judge who ruled last week that Detroit’s bankruptcy filing violated the state constitution’s ban against tampering with public employees’ pensions, adjourned a hearing on the case this morning until July 29. Ingham County Circuit Court Judge Rosemarie Aquilina said:
As you all know, my decision last week was because there’s been a violation of constitution. I don’t believe the constitution should be made of Swiss cheese.
Detroit, with the backing of Michigan Gov. Rick Snyder, is seeking federal bankruptcy protection, including the right to cut pensions for the city’s more than 21,000 retired public employees, including police officers and firefighters. Kevyn D. Orr, the city’s emergency manager appointed by Snyder, has called for “significant cuts” to the pensions of current retirees.
When is enough enough? I’ve given you 34 years. I’ve given you two ankles, a shoulder and a back. I’m not even sure about my lungs. What else do you need?
Aquilina ruled the bankruptcy violated the Michigan Constitution’s ban on “diminishing” or “impairing” the pension benefits for public employees. Today, she said:
This is a very important issue. I understand that there may be this question of moving it to federal court….But these are state issues. We’re dealing with the state constitution and an emergency manager who is a product of the state legislation.
Snyder and Orr and the state’s attorneys are asking the state Court of Appeals to overturn Aquilina’s ruling. But once a bankruptcy filing is made in federal court, legal experts say it generally trumps other litigation in state courts.
Meanwhile, Bloomberg News reports that Detroit’s police and fire pensions asked the federal judge overseeing the city’s bankruptcy to delay the start of the case until the state issues are resolved.
Last week, AFSCME President Lee Saunders revealed that Orr’s legal team two weeks ago refused to meet with AFSCME to discuss retirement issues and, shortly before they filed for bankruptcy, claimed the union would have “months” to address these issues and that meetings would soon be scheduled to do so.”
Public workers are not protected by federal pension insurance. The average public service pension is $19,000 per year. A bankruptcy and possible suspension or reduction in pension payments would result in profound hardship for workers, retirees and their families. Apparently Gov. Snyder and Orr want Detroit’s public-service workers to rely on their children for food and shelter, or have to work until they die.
Michigan Gov. Rick Snyder (R) authorized a bankruptcy filing yesterday for the city of Detroit based on recommendations from financial manager Kevyn Orr, making it the largest city in the U.S. to ever take that step. AFSCME members and other public sector workers were not consulted for input before the filing.
AFSCME President Lee Saunders said in a statement:
Gov. Snyder’s plan to suspend democracy, drive one of America’s largest cities into bankruptcy and deprive workers of their hard-earned retirement security, moved dangerously closer to reality today when without a single negotiation with unions, workers or retirees, Snyder authorized Detroit’s financial manager to file for bankruptcy.
Despite assurances from Snyder’s hand-picked financial manager Orr that AFSCME would have ample opportunity to discuss alternatives, they unilaterally embarked on this treacherous path without meaningful input from those who would be most affected.
Orr had threatened weeks ago that the pension benefits earned by city retirees through their years of public service and in exchange for less pay could not be protected in bankruptcy. Now it appears he and Governor Snyder are working hard to make good on that threat. Detroit’s public service employees worked hard and played by the rules, and now their freedom to retire with dignity is in peril.
As recently as two weeks ago, Orr’s team refused AFSCME’s request to meet and discuss retirement issues. Just last week, Orr’s team claimed the union would have “months” to address these issues, and that meetings would soon be scheduled to do so.
This apparently wasn’t the governor’s true intent. According to published reports, Governor Snyder expressed disappointment with this pace to Orr on Monday, July 15, and the very next day, they began the process to rush Detroit into what could be a lengthy and what surely will be a very costly process.
It’s no secret why Orr and Snyder are in such a hurry: a Michigan court is scheduled on Monday to decide whether Orr and Snyder are using bankruptcy as a backdoor around the state constitution’s protection of pension benefits. Clearly, the Governor and the financial manager are eager to sacrifice the well-being of tens of thousands of workers and retirees, in violation of Michigan’s state constitution.
Public workers are not protected by federal pension insurance. The average public service pension is $19,000 per year. A bankruptcy and possible suspension or reduction in pension payments would result in profound hardship for workers, retirees and their families. Apparently Governor Snyder and Kevyn Orr want Detroit’s public service workers to rely on their children for food and shelter, or have to work until they die.
Metro Detroit AFL-CIO President Chris Michalakis and Michigan State AFL-CIO President Karla Swift released the following statement:
Every step of the way, the citizens of Detroit were told that they had to give up their right to democratic representation in order to avoid bankruptcy. Now that this filing has come anyway, it is clear that either state control has failed or that Gov. Snyder and his emergency manager appointee were not honest about their intentions in the first place.
Today’s action can be taken as confirmation that Orr was hired, secretly and ahead of a declared financial emergency, because he is a bankruptcy expert.
As Chapter 9 proceedings begin, Detroit cannot afford any further attacks on working families, who have already sacrificed so much without a say in the process. City workers have already made severe concession to keep the city afloat. It is time to put the needs of Detroit residents above the interests of out of town creditors.
As hard as Michigan’s winters can hit, so has our latest lame duck session.
Before last December, there were 23 states with fair bargaining bans, also known as “right to work” states. Sadly, the cradle of labor holds the title as number 24. On December 11th, the Michigan legislature rammed through numerous controversial bills, exploiting the advantage of a lame duck session.
Through a shameful display of cowardice, they passed so-called “right to work” legislation in record time with no debate in both the State House and Senate, no committee hearings and with a $1 million appropriation attached to it, effectively making it impossible to bring this issue to the voters in an election. “Why can’t you take this to the voters? Because you know what will happen. You’re doing this in the lame duck because you know in the next session you won’t have the votes!” Rep. Brandon Dillon (D-Grand Rapids).
The Republicans chose to ignore their constituents, and rolled back decades of workers’ rights that many made deep sacrifices to achieve.
Now that the lame duck session is over, a new legislative session has begun. Along with it come concerns that banning fair bargaining in Michigan isn’t far enough for Republican legislators. The threat of privatization hangs over the heads of teachers and staff in our public schools. Possible efforts to roll back MIOSHA, the state agency overseeing worker safety, could make workplaces across Michigan even more unsafe.
But currently what concerns Working America’s members in Michigan the most is the repeal of Prevailing Wages. In government contracting, a prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. These standards are crucial and necessary to provide a livable and fair wage to skilled workers that build our roads, highways, schools and other government funded projects.
When you eliminate the prevailing wage standard, it encourages contractors to take short cuts. It compromises work quality, increases injury rates and lost work time, and results in higher maintenance costs.
This will also bring more outsourcing into Michigan. Predatory contractors will gain the incentive to underbid established businesses by using unskilled or low-skilled workers that come from other parts of the country who are willing to work for less than the local labor market is paying.
Our organizers have been reaching out to members, and overwhelmingly they agree that this is the wrong direction to go.
“The state of Michigan’s economy is very important and fair wages must be paramount for the workers. As a stay at home mom it is important that the wages of my husband be protected. You can protect prevailing wage laws. Please keep the wages with the workers” says member Trisha Zessler of Monroe.
Rich CEO’s and their lobbyists would like to make you think that repealing prevailing wage would save taxpayers money. But in reality, it will cost us more in the long run. Pension plans that were previously privately covered will force tax payers to pick up the tab. Roads that were constructed and repaired by qualified and highly skilled workers will be built with lower standards, making it more likely to need repairs sooner and be replaced frequently. And you can count on dramatically slashed wages for our workers.
This is the last thing that we need here in Michigan. This isn’t carrying the message of more jobs. Instead, it is clearly sending a message that we deserve to be paid less and put more of our hard earned tax dollars in the pockets of rich CEO’s.
Right before the November election, every polling outfit showed the same thing: Even as Michigan voters moved to reelect Democratic Senator Debbie Stabenow and Democratic President Barack Obama, opinion of Republican Governor Rick Snyder, remained fairly high.
Despite controversial policies like the emergency manager law, Public Policy Polling found that 47 percent of Michiganders approved of Snyder’s performance while only 37 percent disapproved.
Today, PPP found that only 38 percent of Michigan voters approved of Snyder while 58 percent disapprove – that’s a net drop of 28 percent. And if the 2014 election was held today, Snyder would lose badly to any of his potential Democratic opponents.
There’s a fair amount of sniping every time a new poll comes out, but here’s what’s important: Snyder is in trouble with the voters for policies he and allies claim are popular.
But that’s not the case: Michiganders want action to create jobs, improve their schools, and have more money in their pocket at the end of the day. Snyder has used this lame duck session to do the exact opposite.
From November 7 to December 18, Gov. Snyder shed his image of a centrist, business-oriented decision-maker to reveal the corporate-backed, anti-worker ideologue underneath. Here is how that revelation happened:
Gov. Snyder did a 180 on workers’ rights and signed a so-called “right to work” (for less) bill into law, banning free bargaining in Michigan. He had previously testified to Congress in February that the issue was too divisive.
Snyder also allowed the legislature to inoculate themselves against the recall process, which is one of the only actions voters can take to express disapproval (especially when legislators don’t reveal their true agenda before the election).
About a month after a referendum repealed Snyder’s undemocratic emergency manager policy, which allows state takeover of local governments, Snyder signed a new one into law.
Also in the poll, PPP found that 51 percent oppose the free bargaining ban (including 50 percent of independents), and that 40 would vote to repeal it by referendum if given the chance.
And before you go thinking that this is a skewed, biased, or otherwise unreliable poll, remember this: Public Policy Polling was the most accurate pollster of the 2012 cycle, according to study by Fordham University.