CHICAGO — With its emergency manager warning of a possible bankruptcy, Flint, Mich. is hoping a temporary court ruling allowing it to cut retiree health care benefits will bring some relief to its 2015 budget.
The US District Court Eastern District of Michigan Southern Division ruled in early July that the city could modify its retiree health care benefits, temporarily lifting an injunction imposed in March 2013 after retirees filed a lawsuit over the city's plan to cut the benefits.
In the ruling, the court said Flint had no other revenue-raising options and would be forced to cut public safety positions — 36 of 150 police officers and 19 of 94 firefighters — if it cannot reduce its other post-employment benefit liability payments, the court said.
The city has shown that it cannot borrow to cover the payment, raise taxes or even sell its hospital because that facility's legacy cost level "makes it unappealing to investors," the ruling said. "Flint has demonstrated that its abilities to raise revenue and/or cut expenditures is presently severely curtailed."
The injunction will be lifted until the lawsuit is settled.
"The court's decision to modify the injunction recognizes the negative impact the injunction was inadvertently having on Flint's ability to provide basic services," emergency manager Darnell Earley said in a statement.
Last week, Early said that if the court does not ultimately rule in the city's favor, it could mean bankruptcy, according to an Associated Press report. "We are headed over the same cliff as Detroit," Earley told the AP. "We can't even sustain the budget we have to put more money into health care."
Located 60 miles outside Detroit, Flint has been taken over by the state twice in the last 10 years.
