Union threatens to sue Wayne Co. for axing '13th check'
Detroit — An attorney for the union that represents 2,000 Wayne County workers threatened Thursday to sue the county for eliminating an extra annual payment to retirees known as the "13th check."
"The commission has just voted to unilaterally change the ordinance that created (the 13th check)," Keith Flynn, an attorney with the Detroit law firm Miller Cohen who represents AFSCME Council 25, told commissioners. "Today, what this commission has done has bought itself maybe another two lawsuits."
His remarks came shortly after the commission's vote to do away with the extra payment retirees get each year instead of cost-of-living increases.
The vote was 8-5 with two commissioners abstaining. Alisha Bell, D-Detroit; Al Haidous, D-Wayne; Tim Killeen, D-Detroit; Jewel Ware, D-Detroit, and Ilona Varga, D-Lincoln Park, voted no. Commissioners Irma Clark-Coleman, D-Detroit, and Martha Scott, D-Highland Park, abstained.
Also during the commission's meeting Thursday, the panel discussed county Executive Warren Evans' announcement he has asked the state to declare a financial emergency in the county and intervene to help fix its finances.
In addition, they rejected a motion to override Evans' veto of a commission resolution to tap into the delinquent tax revolving fund to pay a $49 million legal judgment and spare property owners a one-time tax hike this summer.
Flynn said the union has not decided whether to take any legal action.
Evans called for eliminating the Inflation Equity Fund, which supplies the extra payment, to reduce the county's underfunded pension liability, officials said. They also said the fund's assets will be transferred to the county's general employee pension fund.
Wayne County has about 5,500 retirees and an employee pension plan that's underfunded by $910.5 million, according to the most recent actuarial report for the county.
The county created its Inflation Equity Fund in 1984. It allows the retirement board to grant an additional retirement check when the system is overfunded.
Wayne County is wrestling with a $52 million structural deficit, a recurring shortfall that stems from an underfunded pension system and a $100 million yearly drop in property tax revenue since 2008. Adding to the deficit, the county has taken about $20 million from its general fund each year to help bolster its pension system.
On Wednesday, Evans said he had asked State Treasurer Nick Khouri to declare a financial emergency in the county and support Evans' request to enter into a consent agreement.
A consent agreement is negotiated between a local government or school district and a state agency to address financial problems. It could enable Evans to squeeze millions in concessions from unionized county workers through contract give-backs.
Commission Chairman Gary Woronchak began Thursday's meeting by discussing the request, saying the panel must be involved in decision-making if the state declares a financial emergency.
"This is what's most important for (commissioners) to know: IF a financial emergency is eventually declared, under the law it is the Wayne County Commission, and only the Wayne County Commission, that in the first instance will decide what course of action will be taken to remedy the situation," he said. "Under state law, the Wayne County Commission is an important part of this process. We owe it to our constituents to get it right."
Earlier in the meeting, Commissioner Raymond Basham, D-Taylor, made a motion for commissioners to override Evans' veto of the board's resolution to dip into the county's $78 million Delinquent Tax Revolving Fund to pay a court-ordered $49 judgment.
Basham said he received numerous pleas to avoid putting an additional burden on taxpayers.
Last week, Woronchak said the commission wouldn't try to override the veto because it didn't appear there were enough votes to support it.
On Thursday, the commission voted 7-6 against the override, with two members abstaining.
"We're on the verge of an emergency manager," said Commissioner Diane Webb, D-Livonia, who voted against the override. "Taxpayers are going to pay today or they're going to pay later. It'll be less painful if they pay today, so let's get real."