July 3, 2012 at 1:32 pm

Ficano proposes sweeping 20% cuts

Prosecutor blasts budget plan, says she'll sue if necessary

Detroit — Wayne County Executive Robert Ficano is proposing all department heads cut 20 percent to balance a $2.13 billion budget in a county that's lost more than $100 million in property taxes in the last five years.

The two-year budget plan, released Monday and effective Oct. 1, actually increases by 2 percent over last year, but that money comes from increases in state and federal funding, officials said.

The general fund portion is projected at $533 million for 2013 and $543 million for 2014. The general fund was $538 million this year.

Plummeting tax collections are causing big problems for the county budget, Ficano said.

Property tax revenue dropped from $370 million for fiscal year 2007-08 to a projected $264 million in 2012-13. Ficano warned it will be a "long slow climb back" because of limitations to how much taxes can rise when conditions improve.

"No one anticipated property values falling 25 to 50 percent like they have over the past five years," Ficano said in a statement. "Unless there is significant change in the municipal financing structure in the state, local governments like Wayne County will be hard-pressed to provide even basic, mandated services."

Wayne County Prosecutor Kym Worthy blasted Ficano's budget proposal in a statement Monday, calling it "completely disingenuous."

Worthy said her department has balanced its budget for six years, and that she and her appointees — like other county employees — have already absorbed 10 percent pay cuts.

"In 2011, we went through a nine-month process to develop a two-year budget," she said. "I find Ficano's reasons for this most recent proposal completely disingenuous. He is changing the rules in the middle of the game.

"If I have to sue to run this office properly, I will do so, just as the former sheriff and the court have. I guess being a team player does not matter to the county executive. He can talk to me about cuts when he recoups the millions of dollars in severances, fringes and perks that he has given his staff."

Under the proposed budget — which needs to be approved by Wayne County commissioners — county employees will continue to make less than they did three years ago. An existing 10 percent employee pay cut will stay in place.

Non-mandated services — including some youth services and mortgage help programs — will have to find other funding sources or be eliminated, officials said.

Property taxes are expected to bottom out around 2014, but funding levels aren't expected to reach 2008 levels until around 2028, said Wayne County chief financial officer Carla Sledge.

Wayne County chief deputy treasurer David Szymanski said the cuts will be tough toabsorb.

"We understand the funding crisis the county faces," Szymanski said."(But) there needs to be more than just across-the-board cuts. We need to focus on just mandated services until such time that we can do more."

A recent audit showed an overall deficit of around $155 million for the county. That number includes a $97 million general fund deficit. Auditor general Willie Mayo said contributing factors include deficit spending and expenditures that get approved in excess of original contracts.

County commissioners have been frustrated by the number of retroactive contracts presented to them for approval. Contracts worth more than $50,000 go before the commission. But a contract that at first comes in under the limit often has a way of growing as contractors keep working, commissioners have said.

When the retroactive contracts come back up to a year later, commissioners say they have little choice but to approve them or risk legal action.

The county takes in about $50 million in revenue a month but spends $55 million, according to the report.

To address the problem, commissioners have submitted a controversial five-year deficit elimination plan to the state for approval.

The plan calls for the transfer of surplus and unused funds into accounts solely for the elimination of the debt.

Currently, Wayne and other counties give the unused funds back to the state. The Ficano administration has proposed that after the money is returned, the state would give the equal amount back to the county from the state's general fund.

That would allow the funds — which are earmarked for specific uses — to become unregulated so the county could use them to pay down its deficit. The proposal would add about $30 million in funds to the county for fiscal year 2012 and 2013.

The state has yet to approve the plan and has hired the outside firm of Pierce, Monroe and Associates of Detroit to review all aspects of the county's finances.

The county's bond status is one level above junk and its pension system is only 50 percent funded. The county has hit four of 18 financial triggers that could result in a review by the state Treasury Department.

The county also is also saddled with growing legacy costs. Pension costs are expected to increase from $67 million to $77 million by 2016. Health care costs are expected to rise by more than 50 percent by 2016 — up from $80 million to $122 million, according to the auditor general's analysis.

spardo@detnews.com

(313) 222-2112