CHICAGO (WBBM) – Illinois and Midwest cities that are facing financial struggles in the coming year 2012, are closely watching an East Coast municipal bankruptcy that has taken an unprecedented turn with retired police and firefighters.
Retired police and firefighters in the small town of Central Falls, Rhode Island have agreed to sharp pension cuts which, if approved by the bankruptcy court, could be the groundbreaking canary in the coal mine. The retirees lawyer tells the New York Times big companies have done it, but not governments because public pensions are protected by statutes.
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Rhode Island sidestepped the issue with a law that gives town bondholders more protection than retirees. These non-union retirees approved pension cuts of up to 55%.