Moody’s says Wayne County’s cuts are ‘credit positive’
Credit rating agency Moody’s Investor Service said this week Wayne County’s efforts to eliminate its deficit through state intervention and cost-cutting are “credit positive.”
In a research report issued Wednesday, New York-based Moody’s said Gov. Rick Snyder’s likely declaration of a financial emergency in the county “will give it new tools to cut costs and balance expenses with diminished financial resources.”
However, the credit rating company maintains its negative outlook for the county’s finances.
Last month, Moody’s affirmed its Ba3 rating and negative outlook for the county. The company downgraded the county’s rating in February from Baa3 to Ba3 due to its finances.
On Friday, Wayne County Executive Warren Evans said the financial market is taking notice of the progress in eliminating the county’s $52 million structural deficit.
“Even though we have taken many significant steps forward, there is still much work to do,” he said in a statement.
Since taking office in January, Evans’ administration has taken bites out of the deficit through a series of initiatives, 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 cut $230 million from the budget over four years.
In addition to its structural deficit, Wayne County is struggling with an employee pension that’s underfunded by $910.5 million, according to the most recent actuarial report for the county. Wayne County has about 5,500 retirees.
Last month, Evans asked Michigan’s Department of Treasury to declare a financial emergency in the county and support his request to enter into a consent agreement.
Two weeks ago, state officials decided there is probable financial distress in Wayne County, putting it on a fast track to have experts scrutinize its finances.
Evans has said the only way the county can tackle its legacy costs is with a consent agreement.
“The declaration of a financial emergency and entering into a consent agreement with the State of Michigan will give us the tools necessary to clear the path to financial recovery and stabilize the County for our residents, employees, existing businesses and future investors,” he said Friday.