Howes: Fiscal fight fraught for Wayne County's Evans
If Warren Evans wants a tough job, he's got it.
The new Wayne County executive takes office this week facing a budget chronically out of balance and a county pension fund woefully underfunded despite nearly six years of steadily rising equity markets.
Add the long legacy of predecessor Bob Ficano's mismanagement: the botched county jail project; outrageous early retirement packages for ol' Bob's appointees; and a continuing federal corruption probe of county government that promises to leave a taint however it ends up.
Add declining property tax revenue tied to home values walloped in the Great Recession; an accumulated deficit running at roughly $100 million, or $30 million a year; a county pension fund depleted by sweetheart deals leaving it only 60-percent funded.
Add the uncomfortable, but undeniable, fact that Wayne County's financial dysfunction is all the more glaring in contrast to neighboring Oakland County. The admittedly richer jurisdiction got hammered in the recession, too, but its leadership has clearly put it in the proverbial rear-view mirror.
Into this steps Evans, the former sheriff (and one-time Detroit Police chief) who is not exactly a newcomer to the county's contorted fiscal gymnastics. He vows to fix the books and right the pension wrongs without unduly impacting county employees and retirees.
How, exactly, is that to be achieved?
Not easily, given the structure of county government, the politics between its myriad communities and the difficulty of applying the state's emergency manager law — a legal precursor for any Chapter 9 bankruptcy — to a financial restructuring of Michigan's most populous county.
Unlike Detroit, the county has two constitutionally elected officers — sheriff and prosecutor — who do not report to the county executive but account for a large chunk of the county budget. Could that implicit conflict be reconciled in, say, a decision to restructure in bankruptcy?
Second, a more fraught path to any potential bankruptcy would weaken, not strengthen, the motivation for public-sector unions to do any pre-emptive (and presumably concessionary) deal with an Evans administration. Absent a clearer path to Chapter 9, that posture likely would not change.
Third, a Snyder administration that navigated the bankruptcy of Detroit has little appetite to engineer another titanic case. Not when its lawyers and the state Treasury Department essentially have concluded that the existing emergency manager law cannot be easily adapted to Wayne County's situation.
Additionally, the governor's obvious alliance with Mayor Mike Duggan, and Duggan's strong support of Evans, politically complicates any potential state intervention in Wayne County finances.
Still, the county's troubles are deep and chronic. Its financial leadership in recent years, or what passed for it, proved clumsy and unsophisticated. Its inability, or refusal, to shore up its pension fund amid rocketing equity markets is a missed, almost unforgivable, opportunity.
Evans' trimming the salaries of top appointees to save taxpayers $1.2 million is a start, as is cutting (barely) the number of appointees in a bureaucracy rife with them. Necessary, but hardly sufficient.
That's the problem. Absent a sustainable financial crisis marked by payless paydays or missed bond payments, to name two triggers, it's difficult to conjure a scenario that would push the county toward the fate of Detroit, home to the largest municipal bankruptcy in American history.
More, auto sales on a six-year tear; local automakers booking billions in profit in their home market; declining unemployment; fat profit-sharing payments to union members and fatter bonuses for the salaried rank — all of it effectively contradicts the case for fiscal restructuring in the public space.
Namely, if things are so good everywhere else, even in Detroit (comparatively speaking), how can they be so bad in Wayne County? That's a question Evans will need to answer persuasively, with transparency and meaningful specifics, if he hopes to get any support for a necessary financial workout.
Absent breakout leadership, it's more likely an Evans-led Wayne County will bounce along the edge of financial disaster than it will clean up its house in ways that emulate Oakland or a deleveraged Detroit moving this month into its post-bankruptcy era.
That's safer and more politically familiar. But it won't do much — if anything — to improve iffy credit ratings or an underfunded pension backed by the residents who pay the bills.
Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at http://detroitnews.com/staff/27151.