DETROIT (AP) — A judge has given Detroit the green lightto cut pensions as a way out of the
largest municipal bankruptcy in U.S.history, a decision that puts the case in the laps of thousands
ofretirees who had hoped that the Michigan Constitution would protect themfrom getting smaller checks in
their golden years.Judge StevenRhodes said the city is eligible to stay in bankruptcy court and scrub$18
billion in debt, about half of that amount linked to underfundedpensions and health care obligations. But he
also warned officials thatthey’ll need to justify any deep reductions.The case now turns to crunching
numbers and trying to strike deals, although unions are pursuing an appeal.Some retirees said they felt
socked by the outcome Tuesday."We’llbe thrown out of our homes and starving if they seriously slash
ourpensions. Then they’ll tell us to go to the soup lines," said DavidSole, 65, who retired from the
public works department in January after22 years and whose wife also is a city retiree."We don’t know
what they are going to take," Sole said. "The judge said he would not tolerate steep cuts. What’s
steep?"Thejudge, who wondered aloud why the bankruptcy had not happened yearsago, said pensions can be
altered just like any contract because thestate constitution does not offer bulletproof protection for
publicemployee benefits. But he signaled a desire for a measured approach andwarned city officials that he
would not "lightly or casually" sign offon just any cuts."This once proud and prosperous city
can’t payits debts. It’s insolvent," Rhodes said in formally granting Detroit thelargest public
bankruptcy in U.S. history. "At the same time, it alsohas an opportunity for a fresh start."The
ruling came more than four months after Detroit filed for Chapter 9 protection.Rhodesagreed with unions and
pension funds that the city’s emergency manager,Kevyn Orr, had not negotiated in good faith in the weeks
ahead of theJuly filing, a key condition under federal law. But he said the numberof creditors — more than
100,000 — and a wide array of competinginterests probably made that "impossible."Detroit
"could have and should have filed for bankruptcy long before it did. Perhaps years," the judge
said.Thedecision set the stage for officials to confront debt with a plan thatmight pay creditors just
pennies on the dollar and is sure to includetouchy negotiations over the pensions of about 23,000 retirees
and 9,000workers. Orr says pension funds are short by $3.5 billion; most whocollect get less than $20,000 a
year."We’re trying to be verythoughtful, measured and humane," Orr told reporters. "The
reality isthere is not enough money to address the situation no matter what wedo."The city has argued
that bankruptcy protection will allow itto help beleaguered residents who for years have tolerated slow
policeresponses, darkened streetlights and erratic garbage pickup — a concernmentioned by the judge during a
nine-day trial that ended Nov. 8.Beforethe July filing, nearly 40 cents of every dollar collected by
Detroitwas used to pay debt, a figure that could rise to 65 cents withoutrelief through bankruptcy,
according to the city.City truckmechanic Mark Clark, 53, said he may look for another job afterabsorbing pay
cuts and higher health care costs. Now a smaller pensionlooms."Most of us didn’t have too much faith in
the court. …The working class is becoming the have-nots," Clark said outside thecourthouse. "I’m
broke up and beat up. I’m going to pray a whole lot."MarciaIngram, a retired clerical worker, said she
may need to find work butadded: "How many folks are going to hire a 60-year-old woman?"Thejudge
spoke for more than an hour in a packed courtroom, recitingDetroit’s proud history as the diverse,
hard-working Motor City devotedto auto manufacturing. But he then tallied a list of warts:
double-digitunemployment, catastrophic debt deals, thousands of vacant homes andwave after wave of
population loss.Behind closed doors, mediatorshave been meeting with Orr’s team and creditors for weeks to
explorepossible settlements. The judge has told the city to come up with a planby March 1 to exit
bankruptcy. Orr has said he would like to have oneready weeks earlier.The city is so desperate for money
that itmay consider auctioning off masterpieces from the Detroit Institute ofArts and selling a water
department that serves much of southeasternMichigan.The American Federation of State, County and Municipal
Employees, which represents half of city workers, vowed to appeal.Orr’steam got "absolutely
everything" in Rhodes’ decision, attorney SharonLevine told reporters, adding: "It’s a huge loss
for the city ofDetroit."Orr, a bankruptcy expert, was appointed in March under aMichigan law that
allows a governor to send a manager to distressedcities, townships or school districts. A manager has
extraordinarypowers to reshape local finances without interference from electedofficials. By July, Orr and
Gov. Rick Snyder decided bankruptcy wasDetroit’s best option.Detroit, a manufacturing hub that
offeredwell-paying, blue-collar jobs, peaked at 1.8 million residents in 1950but has lost more than a
million people since then.Formerhospital executive Mike Duggan takes over as mayor in January, the
thirdmayor since Kwame Kilpatrick quit in a scandal in 2008 and the firstwhite mayor in largely black
Detroit since the 1970s.Orr is incharge at least through next fall, although he’s expected to give
Dugganmore of a role at City Hall than the current mayor, Dave Bing, who haslittle influence in daily
operations.___Associated Press writer Corey Williams contributed to this story.___Follow Ed White at http://twitter.com/edwhiteap .Copyright 2013 The
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