Moody’s: Wayne Co.’s consent agreement ‘credit positive’
Wayne County’s approval of a consent agreement with the state is a step toward improving the county’s credit, according to credit rating agency Moody’s Investor Services.
In a report issued this month, Moody’s said “the consent agreement enables the county to implement key cost-cutting measures and increase the state’s oversight role, which are both credit positive for Wayne County.”
It also said even though the agreement allows the county to renegotiate its debt and move into receivership — setting the stage for default and lowering its credit score — “we believe that the county’s progress in addressing its operating deficit and its ongoing plans to improve operations minimize the likelihood of further financial deterioration that could lead to creditor impairment.”
Wayne County commissioners voted Thursday to approve the consent agreement to fix the county's financial emergency.
State Treasurer Nick Khouri and Wayne County Executive Warren Evans have yet to sign the agreement and put it into effect.
Under the agreement, Wayne County will be required to provide the state with periodic financial status reports.
The agreement also will grant Evans the powers of an emergency manager in contract talks with the county’s unions. That means if he and the unions can’t reach a deal in good-faith negotiations 30 days after the consent agreement goes into effect, he can impose terms such as lower wages, pension cuts and employee contribution increases.
Evans has said repeatedly he prefers to reach agreements with the county’s unions at the bargaining table.
The county is struggling with a $52 million structural deficit, stemming from a $100 million drop in annual property tax revenue since 2008. However, the county has been able to cut the deficit by $29 million since January, according to Moody’s report.
Adding to the deficit, the county still has to contend with a pension system that’s underfunded by $910.5 million, according to the latest actuarial reports.