Detroit’s bankruptcy and the problems facing its pension funds have concerned many states and cities across America with Mayor Bloomberg becoming the latest official to warn that his city may go the way of Detroit.
Detroit in the state of Michigan has become the largest US city to file for bankruptcy over its more than $18 billion debt. Half of the city’s debt comes from pension and retiree health care costs.
Bloomberg called on New York City and its next mayor to address the rising burdens of pensions and healthcare to protect the city from insolvency.
“The next mayor will have an unprecedented opportunity to win pension and health care changes from the City’s labor unions,” he said during a speech Tuesday.
In 2002, pension costs in the city were $1.4 billion, today they are $8 billion a year.
“So clearly, our increase in annual pension costs, which today total more than eight billion US dollars per year, was the result of a benefit structure that promises retirees too much too soon, and requires them to contribute too little to pay for it,” the mayor said.
Bloomberg further warned that manufacturing sector was weakening in New York City which was once one of the manufacturing centers in the United States.
Chicago, the third-largest city in the United States and hometown of President Barack Obama, is also facing a public pension crisis that threatens to upend its finances.