Detroit is closer than you think.
Pensions promised by beleaugered Michigan city -- which, with its vanished industry and crumbling vacant buildings has served as a poster child for American urban decay -- are not guaranteed, a judge has ruled.
And that ruling -- that public employees are not guaranteed the payouts promised by cities which can't afford them-- could have big impact in California, according to the New York Times.
Cities across the Golden State are grappling with mammoth pension obligations. Some, like San Jose Mayor Chuck Reed, are trying to get police, firefighters and othe public employees to pay more.
Others are considering bankruptcy. Vallejo pursued that option and managed to keep all pensions intact. Stockton, the San Joaquin County seat, is also bankruptcy. For now, a court has ruled that employees will receive the same benefits, but not all of the city's creditors are satisfied.
One, Franklin Investments, which Stockton proposed paying less than a cent on the dollar for $35 million in past-due bonds, has yet to settle with the city, the newspaper reported. The ruling on Detroit could push Franklin to push for more money, money that could come out of retirees' pockets.
"Franklin Templeton is going to have a lot to say about this ruling," bankruptcy lawyer Karol K. Denniston told the newspaper.
The ruling in Detroit does leave some up to the imagination: it does not specify how big the cuts to pensions should be, the newspaper reported.