This is a rush transcript from "Your World," June 20, 2014. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Well, maybe this will rev up the Motor City, Michigan Governor Rick Snyder just signing a set of bills sending nearly $200 million to the bankrupt city of Detroit.
But will this grand bargain, as they're calling it, be enough to turn its around?
One of its creator joins us now, in fact probably the key player in it right now, Detroit Emergency Manager Kevyn Orr.
Mr. Orr, very good to have you.
KEVYN ORR, DETROIT EMERGENCY FINANCIAL MANAGER: Good afternoon, Neil. How are you?
CAVUTO: I'm fine, sir
I remember when you took the reins of this. You said this is the Olympics of restructuring.
ORR: Yes, I did.
CAVUTO: It's turned out to be true.
What you essentially had to do is take a bankrupt city, what emerged later as a bankrupt city, and make it right, renegotiate contracts, try to make sure pensioners were still protected, but what gets some of those increases that they had coming shaved at bit to reflect economic reality. Where do we stand now?
Well, I liken it to a long race, and we're coming into the fourth turn. We still have to get out the vote for the plan of adjustment with our creditors and our pensioners and retirees, as well as active employees, and then we have to get through a confirmation hearing, but we have made a little progress since we last talked. So we're moving forward.
CAVUTO: All right, now, a lot of those city worker unions originally when you came on board, they weren't too keen on you and they didn't like the idea of an appointed emergency...
ORR: Yes, emergency manager.
CAVUTO: Exactly, coming in and doing that job.
In fact, there was talk that you and the mayor were chafing about that. He had to cede a lot of his authorities, although you have worked well together. How do they feel now? I'm told that they're supporting this because they figure, better a slice than everything going, right?
ORR: Well, I would like to think we have moved beyond some of the sort of emotion and reaction to having an emergency manager and dealing with the realities on the ground.
Realities are, we have a billion dollar general fund and we have $18 billion in debt, so we couldn't pay all our debt if we wanted to. We have negotiated with their leaders both on the union side and as well as the retiree side, the association side, agreements.
And that's all the plan of the adjustment is. It's a compilation of settlements for their benefit, and we now, with the signing today by the governor, Snyder, of the state's settlement, it's $350 million in value, $200 million in present value, that's real cash that's in our hand right now. We now actually have the money to effectuate the plan and protect the pensioners.
So we're telling them, turn out and vote yes. If you vote yes, you get a dollar. If you vote no, you are going to get 30 cents less or worse.
CAVUTO: And the argument for the unions wanting this, public unions wanting this is that it's not a great, but the alternative is even worse. Why do say they the alternative is worse? Do they fear that if this goes down, that more draconian cuts are coming?
ORR: Oh, without a doubt, Neil.
In fact, the total of $860 million that is coming in, we have over 13 foundations, Ford Foundation, Knight-Ridder, Skillman, Kresge, Kellogg, others, coming into the city and giving us almost a billion dollars we did not have seven months ago.
And the condition of that money for the pensions is you don't sell any art from the Detroit Institutes of Art, but you take all of that money and give it to pensioners. If they don't vote yes, all of that money goes away. So I don't see many people who think it's a good idea to turn down a billion dollars to help fund their pensions which were unfunded almost to the tune of $3.5 billion.
So this is really a win-win for everyone, although it does require some people to make difficult choices.
CAVUTO: It is very difficult sometimes for unions in particular. Of course, they feel, and many pensioners feel -- I guess there are close to 23,500 of them in your fine city who feel that they're owed this money because it was contract and a covenant made.
CAVUTO: But now there's all these loosey-goosey things that go on with pensioners and their money in other cities and states. You had said that when you came in and the city was borrowing from the pension fund and calling that revenue, it wasn't.
It was debt. So, you woke people up to the reality that just taking off your credit line is not money from heaven. It's going deeper into debt. But, sir, a lot of cities and states do that. And that is a ticking time bomb, is it not?
ORR: Well, I'm going to stay away from sort of the broader extrapolation of what it means.
CAVUTO: No, no, you're free to rip anyone you want on this show. Feel free.
ORR: I'm dealing with Detroit.
ORR: Each city, municipality, state, county is different.