Michigan Governor Rick Snyder testified in the Detroit bankruptcy eligibility trial.
DETROIT — Michigan’s governor knew he had the power to make Detroit’s bankruptcy filing contingent on protecting pensions but chose not to exercise that power.
That’s one of the admissions Gov. Rick Snyder made in federal court Monday as lawyers grilled him on why he authorized the bankruptcy filing — the largest municipal bankruptcy filing in U.S. history — and whether he took any steps to make sure the pensions of city workers would not be hurt. Snyder’s appearance on the witness stand is a first for a Michigan governor still in office.
The governor dodged several questions, citing either attorney-client privilege or saying he didn’t recall certain events.
One lawyer asked him point blank whether he and Detroit emergency manager Kevyn Orr ever discussed filing bankruptcy as a way to cut the pension liabilities. Snyder didn’t answer, citing attorney-client privilege. Orr is a partner with Jones Day law firm whom Snyder hired to restructure the city’s finances.
The same lawyer asked him whether Orr ever asked the state if it would share in financial burden of Detroit’s pension liabilities.
“I don’t recall,” Snyder said.
Snyder testified Monday in Detroit’s bankruptcy trial that the prospect of retiree pension cuts is a question that the judicial system should decide.
It was a historic moment for the state and a defining moment for the first-term Republican — a Battle Creek, Mich., native; University of Michigan graduate; and former Ann Arbor, Mich., investor now called to defend his decision to take over the city of Detroit.
William Wertheimer, a lawyer for plaintiffs who filed a lawsuit seeking to overturn Michigan’s emergency manager law, asked Snyder whether he had privately anticipated the outcome of a dispute over whether Michigan’s Constitution protects public pension from cuts in bankruptcy.
“I view that as a legal matter,” Snyder said. “If the court was deciding that we had a constitutional obligation, then we would pay it.”
Snyder agreed to testify after the United Auto Workers union subpoenaed him to discuss his role in the city’s Chapter 9 bankruptcy case.
Snyder refused to answer a question on whether he had shared his opinion with Orr whether the state has an obligation to preserve Detroit retiree pensions. The Michigan Constitution protects public pensions as a “contractual obligation” that cannot be “diminished or impaired,” but federal bankruptcy law allows contracts to be severed.
While refusing to share his legal opinion on that issue, Snyder said authorizing Detroit’s bankruptcy was a “tremendously difficult decision to make but the right one under the circumstances.”
Chapter 9 was the best option after Detroit and the state’s emergency manager law because the subject of lawsuits in the days before the filing, he said.
USA Today: http://www.usatoday.com/story/news/nation/2013/10/28/detroit-bankruptcy-trial/3286147/
