Editorial: Wayne County recovery plan tough, but needed
Wayne County Executive Warren Evans is right that the recovery plan he's offering is "a big bottle of tough medicine." But the county is on its financial death bed, and only the strongest prescription will bring it back to health.
Evans must erase a $52 million structural deficit, amounting to 10 percent of its General Fund. Wayne County has been running such annual operating shortfalls every year since 2008. If it doesn't at last erase it, state intervention under the emergency manager law is inevitable.
So Evans is proposing a comprehensive plan that seeks to bring operating efficiencies to the county's long mismanaged government, but also requires considerable sacrifice from county workers.
The county's economic woes can be traced to a lot of things. Certainly falling property tax revenues are a major contributor. But Wayne County also has been notorious for decades for maintaining a bloated bureaucracy and for signing some of the most lucrative labor agreements in the region. Evans has to start rolling back both.
He wants to outsource services and consolidate departments. He's already cut his own executive staff. That's the easy stuff.
Harder will be the work to reform a pension system that is $910 million underfunded.
To do that, Evans wants to change the formula for calculating pensions. Instead of basing the benefit on the final three years of total compensation, including bonuses and overtime, he'd stretch out the averaging period to perhaps 10 years, and include only base pay.
Instead of being able to go out the door with full benefits at age 50 or 55, workers would have to stay on the job until age 62 to get maximum pensions.
These steps could save the county up to $13 million a year.
Evans would also eliminate health care for most retirees, and instead offer monthly stipends to help them pay for private plans, similar to what Detroit did. That's another $10 million saved.
Add in a 5 percent pay cut for all workers except prosecutors and deputies, and the givebacks are substantial.
And necessary. The early response from the county's labor unions has been to label the concessions as "draconian."
But asking public employees to work until age 62, as most private sector employers do, is not unreasonable. Nor is not allowing them to inflate their pensions with excessive overtime schemes. Some workers, thanks to trading shifts with lesser seniority peers, are able to triple their salaries in advance of retirement.
The loss of health insurance will be painful, but hopefully most retirees will qualify for Medicare and the stipends will help fill the gap.
For years Wayne County has tried to patch its budget hole with gimmicks, shifting money around without ever solving the structural problem.
This plan should finally balance the budget. But it isn't the end game. Still to be addressed is the unfinished downtown jail, which costs the county $1.3 million a month in debt service.
Keeping Wayne County outside state control, where cuts likely will be more harsh, is Evans' goal. It should be an objective shared by the unions as they begin bargaining on the recovery plan.