Two Detroit pension boards have filed a federal lawsuit over Michigan Gov. Rick Snyder’s new law that gives emergency managers control over employee pensions. The Detroit General Retirement System and the Detroit Police and Fire Retirement System are challenging the law as unconstitutional and a threat to public employee contracts.
The law has been criticized for allowing state-appointed managers too much power to run financially-strapped towns and school districts—powers which could include rewriting or terminating public employee contracts and firing elected officials.
Gov. Snyder and state treasurer Andy Dillon defend the law, saying it is needed to prevent financial collapse. Detroit mayor Dave Bing says the city needs to cut an estimated $200 million in spending in the next year in order to prevent pensions from being taken over. A mayoral spokesperson said the Governor’s proposed budget should be roomy enough to avoid the takeover. However, Ron King, lawyer for the Retirement Systems, says that doesn’t quell concerns. Detroit does not have an emergency manager, but the City Council has proposed granting the mayor or other city official the same powers as an emergency manager.