Detroit Comes to Broome County…and the Rest of the Nation

 by C. Arthur Reavis

                 This past December, US Bankruptcy Judge Steven Rhodes, ruled that: Michigan’s Constitutional Amendment stating that contracts cannot be amended (read pensions of current and former workers) was superseded by a Federal bankruptcy that does. Therefore, under non-elected “Emergency” City Manager, Kevyn Orr– a bankruptcy attorney and partner at a Washington DC firm which represents energy companies against coal miners in bankruptcy court, the City of Detroit will now screw its former workers and citizens out of the majority of their pensions and assets.

The average amount for Detroit retiree’s pension is not as big as the Vultures and the corporate media they control would have you believe…it’s a paltry $19,000/yr.! Why are the public employees who dedicated their lives providing essential city services now being screwed out of their duly earned pensions? The short answer: so that foreign and other out of state well-heeled creditors can be paid. Who are some of those creditors? Barclays Bank of England (infamous for the LIBOR interest-rate rigging scandal), JPMorgan Chase & Co. (which recently paid $13 billion for their part in creating the Great Recession of 2008), Royal Bank of Canada, Bank of America and several hedge funds. Under a deal negotiated by Kevyn Orr, Barclay’s Bank would pay off Bank of America and UBS through a loan to the city which nets the banks at least $4.4 million in fees.

The Twister!

Detroit is NOT broke! Despite what the media is reporting, Detroit does not need to raid its employee pensions or to sell off its precious works of art. As Nobel Prize-winning Economist Paul Krugman points out, this is another attempt by the “New Austerians” to fleece and impoverish the 99%, while paying themselves (the 1%ers) handsomely. How? By using inaccurate statistics and claiming society faces imminent collapse (clouds raining blood, cows giving sour milk, etc.) if these debts are not paid immediately to the “barely scraping by” banks.

The Math!

We need to understand the difference between a budget report and a Comprehensive Annual Financial Report (CAFR). Budget reports are an edited version of the full report (CARF) and are used by “Austerians” to scare the crap out of everyone. The budget report is an annual report. It excludes most of investments and wealth. A budget is like a checking account for the last year. The CAFR, however, is a combination of checking accounts, savings accounts, and assets since incorporation as a city. When municipalities claim that unions, employees, and public services are driving them broke (and it’s always mostly the unions’ fault) what they are really saying is this: Because we only have $5.00 on hand we’re telling everyone we are broke, while falsely claiming all of our long term financial obligations are due NOW!

So while our contractual obligations are long-term, we’re going to pretend they are due right this instant. Why? So we may say our municipality is broke and avoid paying our long term contractual obligations ever. But, we will be paying back the banks that loaned us money.

What About Broome County?

Broome County Executive Debbie Preston is trying to weasel us into screwing OUR own county public service workers and citizens by blaming employees and their unions!  Ms. Preston recently said, “When we began the Budget process we faced a 24% property tax increase due to contractual obligations to employee unions, unfunded mandates from the Federal and State governments and the increased cost of doing business at our Jail, Nursing Home and Transit [S]ystem.” This is simply her way of trying to pay public employees less while privatizing more public services.

Her solutions includes: hiring outside contractors rather than adding to the “County headcount” (i.e. cheaper, more exploited labor), merging positions across multiple departments including Transit, the Airport, and the Library system (making overworked people do more work for the same or less pay), privatizing the Transit System, privatizing the Nursing Home and building onto the Jail (and, you can bet that will be privatized–the medical unit already is–, once it is paid for by the taxpayers of Broome County). Yet, Ms. Preston sits at the BCIDA and continues to hand out tax breaks and exemptions to companies that never hire the number of employees they say they will, and delight in laying off current workers. Plus, Ms. Preston is pushing to have our county lands polluted by the Fracking Industry as soon as Gov. Cuomo green lights it. Imagine what would happen to our local economy if every public pensioner was suddenly to receive pennies on the dollar?

How about phrasing it honestly Ms. Preston: ‘Because of all the tax breaks the BCIDA, (of which I am the head), has given over the years to businesses that never live up to their obligations, and continuing to seek ways of paying even less into our community with my administration’s blessings I’m going to: cut services to the community, privatize everything, and blame the hard working employees of Broome County and their weak unions. You all either have to capitulate to my terms or there may be an impending bankruptcy down the road, because we are “at risk”!’

So what does Ms. Preston’s budget and disrespectful representation of County employees and disdain the citizenry have to do with Detroit: Precedent! You see readers, Judge Rhodes (remember him?) has basically given every “at risk” municipality in this nation, no matter how big or small, a way out of their contractual obligations to their public employees, teachers, fire-people, police-people, etc., all based on Magical accounting mechanisms.

Broome County may be “at risk” down the road, someday? But what about attracting responsible businesses that actually pay their fair share of taxes and a living wage? What about reducing the jail population by decriminalizing certain drugs, or establishing a community bail fund in Broome County? What about going after the big property owners who are not paying their taxes? Instead Ms. Preston and her goon-squad of fraud investigators employed by the county choose to target individuals receiving food stamps and not reporting what grandma gave them so they could eat a little healthier.




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