Wayne County may hike millage to fulfill court order
Detroit — Wayne County Executive Warren Evans and commissioners appear split on whether to impose a one-time additional tax on home and property owners this summer to make a court-ordered $49 million payment into a county retirement fund.
Evans’ administration said Tuesday the proposed increase, estimated at 1.23 mills, is the least painful way to pay the debt. But some county commissioners want to tap a revolving fund that lends money to local governments before resorting to the tax increase, a one-time charge that would cost $62 for the owner of a home with a market value of $100,000.
Officials discussed the issue during the County Commission’s committee of the whole meeting Tuesday, and the 15-member panel is expected to take it up again when it meets Thursday as a full board.
Deputy Wayne County Executive Richard Kaufman made the administration’s position on the matter clear to the commission. “We don’t have the money,” he said. “You can’t plug a deficit by creating a deficit.”
Commission Chairman Gary Woronchak, D-Dearborn, prefers paying the judgment from the county’s Delinquent Revolving Tax Fund, which totals $78 million.
“For me, knowing there’s a possibility of paying this without a tax levy, it’s unthinkable to me,” he said. “It’s unthinkable that we would put this on the tax bills of every taxpayer in the county. These are the people the 15 of us are elected to represent directly.”
The potential showdown over the debt between Evans’ office and the commission comes as Wayne County’s fiscal reckoning draws closer.
The county is grappling with an annual structural deficit of $70 million and a pension system that’s funded at less than 50 percent. The pension plan is underfunded by $910.5 million, according to the most recent actuarial report done for the county.
Since taking office in January, Evans has unveiled a series of initiatives aimed at shrinking the deficit, including the consolidation of three departments and a division, and a countywide spending and hiring freeze.
He also rolled out a “recovery plan” in April to fix the county’s finances by cutting $230 million over four years.
A decision issued Friday in Wayne County Circuit Court presented county officials with a more immediate problem. The court ruled that the county must pay $49 million into the “Inflation Equity Fund,” which for the past three decades has provided what’s known as the “13th check” for retirees. The county has about 5,500 retirees.
The payment would make up for $32 million the county pulled from the fund in 2010 to cover its annual pension contribution, plus lost earnings.
The county’s retirement system had challenged that move in court, saying it violated a state constitutional provision protecting accrued pension benefits.
The county won an initial ruling but a state appeals court reversed the decision. And in December, Michigan Supreme Court justices unanimously affirmed the appeals court decision and sent the case back to Wayne County Circuit Court for a determination of the amount owed.
County officials face a deadline to decide how to pay the $49 million — the county assessor is scheduled to send out this summer’s tax bills by the end of the week.
Under state law, judgments against counties and municipalities can be collected through tax rolls without a public vote at the polls or by the commissioners.
Commissioner Tim Killeen said he’s looking for the least painful way to pay the bill.
“In the end, Wayne County taxpayers are going to pay for all of this anyway,” said Killeen, D-Detroit. “I’m here looking at the long-term. My question is will it make it more or less expensive to taxpayers if we take money from the Delinquent Tax Revolving Fund?”
For some Wayne County residents, a tax hike to repay the retirement fund would be a double whammy.
Inkster city officials said this week they’re seeking a one-time tax this summer to help pay for a million-dollar settlement with a motorist who was filmed being beaten by a police officer during a traffic stop.
Resident Sandra Watley said the city already has taxes higher than affluent communities such as West Bloomfield.
“I’m tired of it,” she said. “It’s like I don’t have a voice in this country anymore.”
Watley, who’s lived in Inkster for more than two decades, is also director of a citizens’ group called the Inkster Citizens Action Network.
“Everytime someone sues they city, they put it on our tax bills,” she said. “I don’t know how city officials agree to this when they know we don’t have any money.”
Justin Mordarski, a life-long Taylor resident and a trustee with the Wayne County Taxpayers Association, said he’s outraged at county officials.
“What really bothers me is the right way to do it is to ask the voters for a millage increase,” he said. “To me, this was just a way to circumvent the traditional electoral process.”