DETROIT (WWJ) – Gov. Rick Snyder says, yes, he did know Detroit know retirees weren’t being protected by any federal programs when he authorized the city’s bankruptcy filing.
Snyder testified that he hasn’t discussed with Kevyn Orr, the emergency manager he appointed for Detroit, the impact a bankruptcy would have on retirees.
Dressed in his typical suit with a red tie, Snyder took the stand shortly after 1 p.m. on Monday in the trial that will determine of Detroit is eligible for Chapter 9 protection.
“I worked very diligently to avoid this process and in good faith go through all the steps possible,” Snyder testified.
Judge Steven Rhodes said he won’t allow questioning about the NERD Fund to be admitted, saying it’s not relevant.
UAW attorney Peter DeChiara grilled the governor on dates and his deposition.
He asked if Snyder told Orr that there “must be significant cuts to pension benefits.”
Snyder didn’t answer that, claiming attorney-client privilege when it comes to conversations with Orr during which an attorney was present to provide legal counsel.
Asked if pension cuts are necessary under Chapter 9, Snyder said he doesn’t “necessarily know there have to be.”
Again citing attorney-client privilege, Snyder refused to say whether he asked Orr how much he hopes to cut Detroit pensions.
When DeChiara began asking unanswered questions again and again, Judge Rhodes said he must insist that he move on.
Earlier in questioning, the governor, who holds a law degree from University of Michigan, said he is aware about a pension clause in Michigan’s constitution.
Snyder was asked if he ever shared with Orr his position on whether or not the state has an obligation to guarantee pensions for those city employees affected by the bankruptcy.
“I view that as a legal matter,” the governor said. “If the court was deciding that we had a constitutional obligation, then we would pay it.”
Snyder testified that he knew “two or three or seven days” prior to Orr’s filing for bankruptcy on behalf of the city that it was going to happen, adding that he’s not sure of the exact time frame.
The governor said that he did ask Orr to wait an extra day before filing so he had time to look over the paperwork.
He said authorizing Detroit’s the filing was “a tremendously difficult decision to make but the right one under the circumstances.”
“Bankruptcy was a very last resort,” Snyder said. “There wasn’t going to be a meeting of the minds.”
He said the state and city made “two-and-a-half years’ effort” to avoid bankruptcy and he’d been keeping an eye on Detroit’s financial situation since 2011.
Questioned about Orr’s hiring, the governor said he began looking into possible emergency manager candidates as early as late 2012.
He said he interviews Orr and at least one other candidate for the Detroit position.
Snyder testified he does not recall whether or not Orr asked the state to bail out the city.
Appearing at a welfare discussion in Detroit Monday morning, Snyder was also asked if he has a backup plan if the bankruptcy doesn’t go forward.
“You go through the whole process,” Snyder said. “People sometimes forget we worked with the city one on one first, then we had the consent agreement , then we did the emergency manager. This process has been going on for two and a half years.”
Earlier Monday, Orr testified that a month before the city filed for bankruptcy, he thought it could be avoided — but only with concessions from creditors that never came.
A key issue is whether the city exhausted all other possibilities and held “good-faith” talks with creditors before the filing. Unions and pension funds say no.
Monday was the fourth day of testimony. Although the trial could wrap up later this week, a decision on the eligibility question isn’t expected for at least a couple of weeks.