By Chris Isidore@CNNMoneyAugust 2, 2013: 11:59 AM ET
Why Detroit filed for bankruptcy
NEW YORK (CNNMoney)
Pay cuts are coming for 1,600 police and fire officers in Detroit, the first since the city became the largest municipal bankruptcy in the nation's history.
The 10% cuts apply to 1,200 police lieutenants and sergeants and 400 comparable officers in the fire department. The cuts, announced this week, will take effect in September.
Bill Nowling, spokesman for Kevyn Orr, the emergency manager overseeing the city's reorganization effort, said other city employees took the same 10% cut in 2012. The cuts for these officers was delayed because of union contracts that were in effect.
"We had to make this cut due to disparity between management and rank and file," said Nowling. He said the city will save $4.5 million from these latest cuts.
"These pay cuts and the savings have already been baked into the budget. They aren't new," he said.
Nowling said if the city is able to get the debt relief it is seeking in bankruptcy, it is possible that some of the pay cuts can be restored at the end of the year.
"It's not a promise, but it's one of the things we're looking at doing," he said.
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Much of the debt reduction sought would come from cuts in pension and retiree health care benefits. The funds to pay those benefits are grossly underfunded, according to Orr, and they make up the bulk of the $9.5 billion in debt relief he is seeking from bankruptcy court.