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Detroit Takes Major Step Forward in Bankruptcy Plan

The city's retirees and active employees have approved its proposed debt-cutting plan.
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In a major step forward for Detroit's efforts to overcome bankruptcy, the city's retirees and active employees have approved the city's proposed debt-cutting plan late Monday. The approval by 82 percent of police and fire retirees and 73 percent of general pensioners paves the way for the so-called "grand bargain." Under the plan, which still must be approved by a bankruptcy judge, most retirees would face a 4.5 percent pension cut and lose annual inflation adjustments. Retired police officers and firefighters would lose a portion of their annual cost-of-living raise. The approval also triggers $816 million from the state of Michigan, foundations and the Detroit Institute of Arts. In a statement, Detroit emergency manager and the architect of the "grand bargain" Kevyn Orr called the results a "positive decision" for both pensioners and the city and said, "The voting shows strong support for the City's plan to adjust its debts and for the investment necessary to provide essential services and put Detroit on secure financial footing."

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-- By CNBC Field Producer Betsy Cline