[quote=njtosd][quote=SK in CV][quote=harvey]I don’t see anywhere where it says the state has any obligation to pay Detroit’s debts.
If it were just a question of the state cutting the check vs. the city, I don’t think the creditors and pensioners would be as concerned as they appear to be.[/quote]
Michigan constitution has an awkwardly worded section:
§ 24 Public pension plans and retirement systems, obligation.
Sec. 24. 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.
This can be read to mean that pensions of political subdivisions {cities} are an obligation of the state. I’d be lying if I said this is clearly what it says. But neither do I think that it’s clear that it says something different.[/quote]
Supremacy clause of the constitution states that federal law (i.e. bankruptcy law) supersedes the state constitution:
“The Supremacy Clause reads “This Constitution, and the Laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the constitution or laws of any state to the contrary notwithstanding”. This clause can be interpreted as saying that a federal court has the power to supersede a state law or even a state constitutional provision.”
If the Michigan constitution is interpreted to mean that city pension obligations are also obligations of the state, federal supremacy is moot. The federal bankruptcy court can only rule on the obligations of the bankrupt debtor. The bankrupt debtor is the city of Detroit. It can’t rule on the obligations of a non-bankrupt debtor. It has nothing to do with supremacy.
