Wayne County Finances In Dire Straits, Evans Asks State To Declare Financial Emergency

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The hulk of an unfinished jail looms over Gratiot. Photo: Nick Hagen

Wayne County has a lot of financial problems. From the sadly iconic fail jail on Gratiot near downtown, to pension costs and much more, the government of Wayne County, which not only includes the city of Detroit but a variety of suburbs from Grosse Pointe to Belleville to Northville, is drowning in debt and obligations.

In a release today, County Executive Warren Evans has asked the State of Michigan to declare a financial emergency for the county of 1,820,584 people. It’s the 19th largest county in the United States.

He outlines that the county’s credit rating is below investment grade, that the county is on pace to be $171.4 million in the red by 2019, there’s a judgement for more than $49 million awarded against the county in regards to the retirement system, and just like the city of Detroit’s situation was, the pension system is severely underfunded.

According to the information Evans provides, the funding for pensions is only at 44% for county retirees right now, and 58% for those who worked for the airport, with an unfunded liability getting scarily close to a billion dollars, at $896 million, in 2013.

And, don’t forget the so-called fail jail. That is putting an additional burden to upgrade the facilities – whether it’s completing the project or going another way – at $100 million.

It’s a stark picture, with the general fund for the county not having a positive cash balance since 2011. Evans is new to the County Executive job, only taking over in January of this year from Bob Ficano.

“Our Recovery Plan provides a clear path to financial stability for the County, but we are keenly aware that our time frame to get the job done is quickly fading,” said Wayne County Executive Warren Evans. “Throughout this process we are constantly evaluating where we stand and proactively seeking solutions to work ourselves out of this massive deficit. I am requesting this Consent Agreement because the additional authority it can provide the County may be necessary to get the job of fixing the county’s finances done.”

A consent agreement shouldn’t be unfamiliar to people who followed the Detroit bankruptcy, but it’s good to recap. It has a few parts. These include regular financial reporting and the authority of state treasurer to place a local government in receivership for breach of the consent agreement. It can give, depending on how it’s crafted, the county executive wide powers similar to an Emergency Manager to make financial decisions. Each agreement is different depending on the situation.

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