February 21, 2014 at 8:47 am

Daniel Howes

Detroit's worst-case scenario should motivate Wayne County

If Bob Ficano is looking for a proverbial club to wield to keep Wayne County out of bankruptcy court, the executive should point today to the federal courthouse in downtown Detroit.

There, Emergency Manager Kevyn Orr and his army of lawyers will file a “Plan of Adjustment” that is expected to be a contentious template for the largest municipal Chapter 9 workout in American history. This, dear county unions, sheriff and prosecutor, is where you don’t want to end up.

“This is much more palatable than what Detroit labor organizations are facing,” Ficano told The Detroit News in an interview Thursday, referring to his late-in-the-game deficit elimination plan. “The reality is that this is a good plan compared to what’s being offered by the EM or a bankruptcy court they could face.”

Tough talk coming from an embattled county executive whose tenure is marred by investigations, contract outrages, development boondoggles and a county pension plan funded at just 45 percent of total liabilities. But he also happens to be right — better a consensual deficit elimination plan supported by the state Treasury Department than a workout imposed by a bankruptcy judge.

This is what leverage looks like. Detroit’s political and union leaders dithered and ignored the warnings, dismissing as theoretical abstractions the predictions now turning out to be devastatingly accurate. If their unspooling fate isn’t a cautionary tale for the state’s most populous county, then what would be?

Answer: nothing.

In a letter to the chairman of the Wayne County Commission, Ficano attributes the county’s fiscal predicament to declining property tax revenues ($353 million cumulatively since 2008), an unfunded pension liability totaling $825 million, declining state revenue sharing, and a tax delinquency account of $93 million controlled by the county treasurer and not included in the county’s books.

He used his State-of-the-County address to tout budget cutting so far: reduced employee salaries 10 percent, through furloughs; cut 1,300 positions and 40 percent of “at-will” employees; trimmed health care costs; eliminated the 13th pension check to retirees (long after he should have); and reduced operating expenses 20 percent. But it’s proving too little to close a deficit of roughly $175 million.

“As has become clear, solving the crisis will no happen without the cooperation and assistance of all involved in county government,” he wrote to Gary Woronchak, the commission chairman. “Restoring the financial health of Wayne County will require the unwavering cooperation of all stakeholders, including County elected officials, management, unions, employees and the state of Michigan.”

First reaction: good luck with that.

An enduring truth about serial financial collapses in southeast Michigan (the Detroit auto industry in 2008, the city of Detroit in 2012) is that substantive movement and restructuring seldom, if ever, comes without existential threats to the status quo. In autos, plummeting sales finally exposed broken, unsustainable business models. In Detroit, political paralysis collided with rigorous financial analysis to produce a financial emergency-turned-bankruptcy that is proving to be very real.

Wayne County is tracing a similar trajectory, with an obvious difference: it’s not first. That should help Ficano and his team persuade “all stakeholders,” in his words, to move on a deficit plan that emits a distinct whiff of too late for a political culture as ossified and rigid as Detroit’s.

But he has other problems, his own management lapses notwithstanding. The county sheriff and the prosecuting attorney account for sizable portions of the total county budget, but they are administered by separately elected officials (Benny Napoleon and Kym Worthy, respectively) who are answerable to voters, not the county executive.

Ficano cannot engineer much of anything without their cooperation — no easy thing given continual public sniping between the three principals, as well as strained ties with the county commission. At a time when Ficano is a) eyeing re-election amid a b) deficit crisis that could invite state intervention, he needs all the political assists he can get.

“Let me put it this way,” he said: “Benny is trying to make an effort. There’s push back and forth. She won’t participate and says, ‘we want more money.’”

Not good. Another truth of Detroit’s collapse into emergency management is that squabbling among elected officials practically guarantees gridlock; gridlock causes delay; and delay invites the intervention all sides profess to abhor.

Posturing and politicking may be natural inclinations in an election year. But they’re empty gestures against a financial tide that is threatening Wayne County as surely as it did Detroit. The only question is whether the outcome will be different.

daniel.howes@detroitnews.com
(313) 222-2106
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.