Tuesday, October 15, 2013
Federalism and state constitutionalism took center stage today, as Judge Steven Rhodes opened hearings on Detroit's eligibility for bankruptcy. Detroit's filing, on July 18, is the largest municipal bankruptcy petition in U.S. history.
According to the Free Press, attorneys for the creditors objecting to bankruptcy argued that federal bankruptcy law "allows the U.S. government to infringe on state rights and gives 'political cover' to Detroit emergency manager Kevyn Orr to pursue pension cuts":
I'd ask your honor to come back with me to elementary and high school when we first talked about what the Constitution means. By turning over Chapter 9 to the federal government and being able to hide behind the bankruptcy process, we lose that accountability that's a cornerstone of what our constitution requires of us.
Creditor attorneys also argued that bankruptcy violates the Michigan Constitution's protection of public pension benefits. Article IX, Section 24 says,
The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.
The hearing on eligibility is slated to go through Wednesday; Judge Rhodes will start an eligibility trial on October 23.