Detroit— Wayne County has reached a deal with its treasurer to pump about $150 million into its general fund, significantly reducing its deficit and the chance of state intervention.
Wayne County Treasurer Ray Wojtowicz’s office is handing over money it squirreled away over the years to help pay down the county’s $175 million accumulated deficit, his chief deputy, David Szymanski, told The Detroit News on Friday.
“We recognize the county is in dire straits,” Szymanski said. “This is an amazingly long recession, so we are doing everything we can to help.”
Executive Robert Ficano said the money will “put a great amount of distance between us and an emergency manager.”
State Treasury spokesman Terry Stanton said the deal is a “positive development, but other steps are still necessary to address the county’s structural deficit.” State officials have monitored the county’s finances for more than a year.
Much of the money comes from funds the treasurer had saved as collateral on loans taken out through its delinquent tax revolving fund. That is money the treasurer advances to communities to cover bills before taxes come due. Earlier this year, aides to Ficano approached the treasurer about parting with the surplus it saved as collateral in the fund.
Wojtowicz had resisted previous overtures from Ficano and commissioners for years to part with the reserves.
He feared that doing so would make it more costly to borrow money, but relented after receiving assurances the treasurer’s borrowing capacity wouldn’t be affected, Szymanski said. Individual communities were notified of the deal Thursday.
“Reasonable people can start from positions that may be far apart but find a way to collaborate in the best interests of our residents,” said commission chairman Gary Woronchak, D-Dearborn.
The treasurer already has transferred $82 million from the fund to the county. Wojtowicz in July also plans to give the county another $58.3 million in earnings from investments made by the fund, $10 million tax auction proceeds in June and $1 million from the collection of significantly delinquent taxes.
The money from the delinquent tax fund was a key component in a deficit elimination plan the commission and state officials recently approved.
Syzmanski warned some money already is committed, so it won’t eliminate the continuing growing deficit. Ficano, a three-term Democrat up for re-election in August, said the move could cut the deficit by at least half. But some county officials were more reserved in their estimates on how the money would be used.
The county’s finances have been fodder for his challengers, but Ficano wouldn’t say whether he thinks the deal will help his re-election chances.
“We are just focused on the finances now,” he said. “I’ve never given up on fixing the fiscal situation. All around us, communities are going into emergency managers. We knew if we worked real hard and put our shoulders to the wheel and ground it out, we’d be able to find solutions. That’s exactly what happened.”
Commissioners have discretion on how to allocate the money. They are expected to review the plan Wednesday, as well as a report from Auditor General Willie Mayo who concluded the treasurer still could give more.
He analyzed the fund and concluded there is a $188 million surplus that should return to the county. The treasurer disagreed and controls the fund.