Wayne Co. asks to be released from consent agreement

Michael Gerstein
The Detroit News

Wayne County is asking state officials for release from a consent agreement it entered more than a year ago, saying it has eliminated a $52 million structural deficit and is on a path toward long-term fiscal stability.

County Executive Warren Evans made the formal request Thursday in a letter to State Treasurer Nick Khouri, whose office is reviewing the matter but was quick to acknowledge the county has made significant financial progress since the August 2015 agreement, which spells out specific budgetary reforms the county would have to meet.

“We’ve stuck to our ‘Recovery Plan’ and come very far in a short period of time,” Evans wrote. “There’s much more work to do, but we’re on a sustainable path and I think the state recognizes that. I look forward to exiting the consent agreement and taking the next steps toward securing a financially strong future for the county.”

After a bill-signing ceremony, Gov. Rick Snyder said he welcomed the county’s progress, but the state will need to do its usual review of the request.

“They’ve made tremendous progress,” Snyder said Thursday in Lansing. “I appreciate the work done by Warren Evans and the people in the county, and we’ll go through the normal review process to see when the appropriate dates are, but I’m encouraged by their progress.”

Treasury spokeswoman Danelle Gittus also acknowledged “significant financial progress” by the county and said the department will review and respond to this request promptly.”

Wayne County Commission Chairman Gary Woronchak, D-Dearborn, said the county could have asked to be released from the consent agreement earlier.

“Having an end to the consent agreement is, of course, positive,” he said in a statement. “Not only will it have been a remarkably short period, the fact is, we could have petitioned for release some time ago, having met the state’s basic requirements for release not too many months after the consent agreement commenced.”

Woronchak also said he still isn’t sure the consent agreement was necessary in the first place.

“No one could reasonably say the county hasn’t had serious financial problems with the massive drop in property values, but I’m still not convinced state intervention was absolutely needed,” he said. “We had more than $80 million in reserves before the emergency was declared. And probably the biggest single reduction in annual expense came when health care was ended for most retirees, which the administration was able to do without a consent agreement.”

Ahead of entering into the agreement on Aug. 21, 2015, Wayne County was grappling with a $52 million structural deficit, stemming from a $100 million drop in annual property tax revenues since 2008 and an underfunded pension system.

The county’s primary pension plan was 45 percent funded and had a liability of $910.5 million, based on an actuarial valuation.

According to the county, Evan’s plan has since eliminated the structural deficit and an $82 million accumulated deficit while restructuring employee and retiree health care to eliminate $829 million in unfunded obligations.

The county has also reduced its unfunded pension liabilities from $817 million to $636 million from Sept. 30, 2014, to Sept. 20, 2015.

“We’ve eliminated the structural deficit, significantly reduced our unfunded pension obligations and most importantly, changed the culture in Wayne County government,” Evans said. “Every day, we’re responsibly working to stretch our dollars to improve the services we deliver to the community.”

The county said it balanced its budget “two years in a row with an accumulated unassigned surplus of $35.7 million for fiscal year 2015. That accumulated unassigned surplus is projected to increase for fiscal year 2016 once final numbers are available.”

“In less than two years, we’ve identified the fiscal problems and taken swift action to address them,” Evans said Thursday. “The county faces significant challenges ahead, but is on its best footing in quite some time.”

Evans asked Khouri on June 17, 2015, to declare a financial emergency in Wayne County and support his request to enter into a consent agreement, allowing the county to address its structural deficit and demonstrate fiscal stability. The state agreed there was an emergency.