Wayne Co. faces $152M revenue loss for 2019-20 fiscal year due to COVID-19
Wayne County expects to lose $152 million in revenue for the second half of the 2019-20 fiscal year budget due to the COVID-19 pandemic, officials said Tuesday.
"It looks like our lost revenue for this fiscal year, based on our projections, is around $152 million," Khalil Rahal, assistant Wayne County executive, told the county's Board of Commissioners' seven-member Ways and Means Committee. "We have a budget of about $1.67 billion and we're halfway through the budget year ... and so when you calculate it, it's almost 20 percent."
Wayne County's fiscal year ends in September.
Rahal made the remarks during a regularly scheduled meeting of the committee. The meeting was held via Zoom.
News of the budget shortfall comes nearly two weeks after Wayne County Executive Warren Evans said he was extending the paid furloughs of the county's nonessential employees through April 30 to coincide with Gov. Gretchen Whitmer's "Stay at Home" executive order to combat the pandemic. The county has about 3,500 full-time employees.
During the meeting, Hughey Newsome, the county's chief financial officer, said the administration does not yet have budget and financial projections for the 2020-21 fiscal year.
"But because of the potential for an economic downturn, the (2021) fiscal year will also have a lot of pressure," he said. "Fiscal year '22 will also have a lot of pressure."
Wayne County won't be able to return to normal — if normal is possible, Rahal said — until a vaccine for the coronavirus is developed.
"Obviously, we're looking at a shortfall in a very dramatic way," the assistant county executive said. "We have to tighten our belts and bring to the commission a budget that's as balanced as possible."
He told commissioners the county will have to rely on three basic principals to achieve that goal: continue to take necessary action to fight against COVID-19, ensure public safety and take the necessary steps that enable the county to provide services deemed essential by the county's charter.
Rahal said the county will have to dip into its surplus/rainy day fund. "If it's not raining now, then I don't know when it's raining," he said. "This is a once-in-a-lifetime situation and there's no more appropriate time to do it."
Other measures include:
► Asking the county's treasurer to transfer money from the Delinquent Tax Revolving Fund into the general fund, Rahal said.
► Reviewing all non-capital expenditures to see where contracts can be deferred or canceled.
► Defer capital expenses and renegotiate existing leases, possible.
Finally, the county will have to look at personnel, Rahal said.
"Nobody wants to, it's the worst thing you have to look at, but it's certainly something you have to," he said. "We are going to implement a hiring freeze and we're going to look at retirements and see if there are any cost savings there.
"Reduction in workforce is something we're going to have to look at," Rahal added. "We don't have an idea of what that will look like, but we're looking at it."
The county's administration began conversations with the unions representing its workers late last week, he said.
Commissioner Al Haidous, D-Wayne, told Rahal he's concerned about cutting county jobs, especially in areas handling critical projects such as road and bridge construction.
"We're already thin in many of those areas already," he said. "Let's hope the damage will be minimal to vital services. We hope to work with the administration to minimize the pain."
Rahal said it's hard to say at this point where the county will see a reduction in services.
Commissioner Monique Baker McCormick, D-Detroit, asked Rahal and the administration's other representatives at the meeting what impact, if any, the budget shortfall will have on construction of the new county jail.
The county is in the process of building a new Wayne County Criminal Justice Complex off Interstate 75 and East Warren. Work on the $533 million project was scheduled to be finished in 2022. Construction has been halted because of the COVID-19 pandemic.
Rahal and Wayne County Corporation Counsel James Heath said the contract the county has with Bedrock Detroit to build the new jail contains a "force majeure" clause that extends the timeline for completion and payment.
"We don't have a reason to believe right now that there is going to be a cost issue with respect to the delay we're experiencing," Heath said. "We're really looking at a time delay, but we haven't gotten to the point where I can give you an idea of exactly how long."
Wayne County is Michigan's most populous county and has about 1.8 million residents. It had a $1.61 billion budget for the last fiscal year. The county has 15 commissioners on its legislative body.
"We're looking to climb out of the hole as painlessly as possible, but there's going to have to be some pain," Rahal said.