Because the state constitution allows it in municipal bankrupcy, the New York Times reports.
So now we have a comparitive experiment in Chapter 9. Detroit will cut pensions. Stockton will not. Over time it wil be possible to see which city emerges in better fiscal condition.
I’m moderately confident the course Stockton chose will work. I’m just doubtful it will work better than cutting pensions. Cutting Stockton’s public employee pensions, however, would have condemned thousands of retirees to reduced circumstances, if not poverty. Only time will tell whether sparing them compromised the city’s fiscal future.