Flint’s Emergency Manager Darnell Earley released a statement this afternoon regarding a recent modification to the injunction in the retiree health care lawsuit against the City:
On June 30th, 2014 the United States District Court for the District of Eastern Michigan, in the case of Welch v. Brown, granted the City of Flint’s motion to modify its preliminary injunction which prohibited the city from modifying certain retiree health care benefits. 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, particularly public safety, and the resulting negative impact on its residents. In its decision, the Court stated that “a failure to modify the preliminary injunction will substantially harm third parties and will not serve the public interest.”
In April, 2012, the City decided to modify health care benefits for current retirees as it balanced its FY13 budget. A City in severe financial distress, balancing the budget required not only modifying retiree health care benefits, but reducing the City’s workforce, reducing employee compensation costs, and raising taxes. A suit was filed challenging the City’s ability to modify retiree health care benefits, and the initial injunction prohibited the City from implementing the changes. As a result, the FY 2015 & 2016 budgets required an additional $5 million to be budgeted for retiree healthcare. This added expense contributed significantly to further reductions in Flint city services, including reductions in the police and fire departments.
The City of Flint is pleased that the Court wrestled with and decided on this difficult issue, and the City is currently evaluating the impact of the Court’s decision on its recently adopted budget.
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