A hearing on whether Detroit's bankruptcy filing violates the Michigan constitution's rules against tampering with pension benefits was postponed to July 29, USA Today reported.

 

Judge Rosemarie Aquilina of Ingham County Circuit Court said she believes the case should be heard in state court despite the state's wish to move it to federal court. She ruled last week that the bankruptcy filing violated the state's constitution.

 

Meanwhile, the city is requesting that state lawsuits from retirees, workers and pension funds be put on hold, Reuters reported. A hearing will be held on Wednesday by U.S. Bankruptcy Court Judge Steven Rhodes.

 

The situation in Detroit is similar to what is playing out on a smaller scale around the nation, reports this Bloomberg article. Lower tax revenue and rising labor costs have left four cities insolvent since 2007.

 

U.S. municipalities have recovered slowly from the recession. Projected pension and health care obligations for the 61 largest cities will top assets by about $217 billion, according to one study.

 

This Fortune article asks if the situation in Detroit could have a silver lining.

 

"America has yet to deal effectively and comprehensively with its residual problems of insufficient growth and employment engines together with pockets of excessive indebtedness," writes PIMCO CEO Mohamed A. El-Erian. "Perhaps Detroit's very public financial demise could serve as a catalyst to significantly elevate popular awareness of this sad and unnecessary reality."