So Much for That Constitution Thing

A federal judge agreed with Detroit a few minutes ago and stopped any lawsuits challenging the city’s bankruptcy.   Detroit attorney Heather Lennox said during two hours of arguments by the city, pension funds and unions.

“If these actions are not stopped, the city would be irreparably harmed. … These litigants will have due process. They will have their day in court,”

In federal court, that is, where Section 24 of Article IX of Michigan’s constitution is unlikely to enter.

The U.S. Bankruptcy Code allows states to limit or bar municipal bankruptcies.  So far (drawing from some conflicting lists though I finally settled on this source and this list) it looks like these states do not allow their municipalities to go bankrupt:

    • Alaska
    • Colorado
    • Delaware
    • Georgia
    • Hawaii
    • Illinois
    • Indiana
    • Kansas
    • Maine
    • Maryland
    • Massachusetts
    • Mississippi
    • Nevada
    • New Hampshire
    • New Mexico
    • North Dakota
    • Oregon
    • Rhode Island
    • South Dakota
    • Tennessee
    • Utah
    • Vermont
    • Virginia
    • West Virginia
    • Wisconsin
    • Wyoming

these states specifically authorize municipal bankruptcies:

  • Alabama
  • Arizona
  • Arkansas
  • California
  • Idaho
  • Kentucky
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New York
  • Oklahoma
  • South Carolina
  • Texas
  • Washington

while these states conditionally allow bankruptcies:

  • Connecticut
  • Florida
  • Iowa
  • Louisiana
  • Michigan
  • New Jersey
  • North Carolina
  • Ohio
  • Pennsylvania
  • Rhode Island

As retiree health care benefits get eliminated and pensions get halved Detroit will be a template for other distressed cities in states on those last two lists to follow and this list will grow.

15 responses to this post.

  1. Posted by Anonymous on July 24, 2013 at 5:23 pm

    But will our taxes go down significantly? If not them what is the point?

    Reply

    • It’s not about taxes going down. That’s not going to happen in this political environment where taxpayers have been conditioned to expect that x% tax increase annually.

      The point is that Detroit taxes can’t go up because there is no one who can (or will) afford to pay them. If Detroit politicians could raise taxes 10% every year and have people pay it there would be no bankruptcy. That’s the problem in New Jersey. The sheep may baaa a bit but they wind up getting shorn because they have given themselves no other choices.

      Reply

      • Posted by Anonymous on July 25, 2013 at 8:13 am

        The people of NJ as a whole have the money and will continue to pay the taxes as long as they are able to, which may be a long time as these people have alot of money and have no organized plan because of their greed and inability to organize. They dont want to lose a penny more than they have to in the present in order to avoid losing it all in the future. They will lose it all because of this.

        Reply

    • Posted by Tough Love on July 24, 2013 at 7:11 pm

      The “point” is to stop the never-ending tax INCREASES.

      Reply

      • Posted by Anonymous on July 25, 2013 at 8:14 am

        People would have to organize as one unit to do so. That will not happen and the politicians know that. Personal greed prevents this organization.

        Reply

        • Posted by Tough Love on July 25, 2013 at 9:44 am

          Interesting how you appear to be calling the Taxpayers …. instead of the Public Sector Union/workers with these absurdly generous Pensions & Benefits … the greedy ones.

          So, which governmental body do you work for ?

          Reply

          • Posted by bpaterson on July 25, 2013 at 5:08 pm

            cant argue with anon- we all greedily want to have jobs to obtain enough money to put food on the table, pay for medical insurance and save for our future since nothing is guaranteed in the private sector. Just look at us greedy barstards, we are disgusting. The public sector pretty much gets lifetime jobs, automatic raises, free health insurance and free pension so they certainly arent greedy at all. Is this what you are saying anon?

  2. Posted by Tough Love on July 24, 2013 at 7:09 pm

    Quoting …” “If these actions are not stopped, the city would be irreparably harmed. … These litigants will have due process. They will have their day in court,”

    In federal court, that is, where Section 24 of Article IX of Michigan’s constitution is unlikely to enter.”

    Good …. That the ONLY Court not controlled by judges with a conflict of interest and not wanting THEIR OWN pensions reduced.

    And it ABOUT TIME the PUBLIC Sector “mugging” of the Taxpayers is REVERSED …by reducing the promised pensions for BOTH those already retired and those still active.

    Reply

  3. Posted by Anonymous on July 25, 2013 at 12:57 pm

    People in NJ are making their exits before it is too late. As far as I can see we are getting ripped off for all of these services we are forced to pay for. The roads and bridges are a mess, schools lag behind other similar countries, parks and libraries are closing and home prices are falling in most communities but taxes go up every year!

    Reply

    • Posted by Tough Love on July 25, 2013 at 2:15 pm

      Quoting … “As far as I can see we are getting ripped off for all of these services we are forced to pay for. ”

      Correct conclusion but not expressed well…..

      We (the Taxpayers) ARE getting ripped of, but it’s NOT because we are forced to pay for services we need and want. It’s because we are forced to unnecessarily pay TOO MUCH for the those services (primarily via the cost of Public Sector worker pensions & benefits) because our elected officials, bought-off with Public Sector Union campaign contributions and election support, agreed to these grossly excessive pensions and benefits.

      Reply

      • Posted by bpaterson on July 25, 2013 at 5:09 pm

        keep in mind, the ones paying for the services are usually not the ones using them.

        Reply

        • Posted by Tough Love on July 25, 2013 at 9:47 pm

          With the Public Sector Union members (and their families) and those who pay little or no taxes:
          (a) always voting (as a block) for greater taxes, either to support their excessive pensions & benefits, or their welfare payments, and
          (b) those in the above group “voting” in much higher percentages than the rest of the population,

          we are approaching a tipping point beyond which there will be few options but to watch us drive ourselves right off the financial cliff.

          To the Public Sector workers reading this …. ask Detroit’s workers/retirees how that’s working out.

          Reply

        • Posted by MJ on July 26, 2013 at 8:00 pm

          Thank you bpatterson, for pointing that out. I am not utilizing these services other than an occasional trip to the library or one of the parks in my neighborhood. My taxes have gone up year after year after year yet my quality of life has declined–bad roads, falling home prices, rude publics, falling SAT scores and state testing scores, unkempt public areas, deteriorating infrastructures ……….towns, cities and municipalities taking loans to pay for public pensions, salaries and healthcare….why is it so much less expensive to live in DE? no sales tax, no income tax, next to nothing in RE taxes but beautiful beaches, quaint communities, etc.

          Reply

      • Posted by MJ on July 26, 2013 at 8:02 pm

        TL,, agreed. We are getting ripped off by over entitled, under worked, over paid public workers who believe that they are owed so much for doing so little. Granted, some jobs just need to be done in the public sector but hardly the cream of the crop. Ripped off!

        Reply

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