DETROIT – Michigan Gov. Rick Snyder confirmed a state review team's finding that Wayne County is operating under a financial emergency.
County leaders have until 5 p.m. July 29 to request a hearing on the governor's determination. Should a hearing be requested, it will be held at 10 a.m. July 30, in Lansing, before the state treasurer or his designee.
Following the hearing (or if no hearing is requested by the county), the governor can either confirm or revoke his determination that a financial emergency exists.
The Wayne County Commission then can choose one of four options to deal with this financial emergency:
1. Enter into a consent agreement with the state of Michigan
2. Get a state-appointed emergency manager
3. Mediation -- also called a neutral evaluation
4. Bankruptcy
County spokesman James Canning said that a consent agreement is "the best option going forward."
"We will seek a consent agreement that respects the roles of the Wayne County executive and Commission, and gives us the tools to focus our efforts on resolving the $52 million structural deficit," said Canning in a statement.
The review team announced its findings on Tuesday. The team was appointed by Snyder on July 2. Its report says numerous conditions led it to determine a financial emergency exists in Wayne County. The following conditions are included:
- The county's last four annual financial audits revealed notable variances between General Fund revenues and expenditures as initially budgeted, as amended, and as actually realized. In addition, County officials underestimated actual expenditures in three of the fiscal years by amounts ranging from $16.7 million to $23.7 million.
- County officials engaged in unbudgeted expenditures in violation of Public Act 2 of 1968, the Uniform Budgeting and Accounting Act.
- Although there was agreement among county officials that existing detention facilities are inadequate, there is no consensus about whether to complete construction on a new jail or to renovate existing facilities.
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According to the county executive's recovery plan, unfunded healthcare-related liabilities were estimated to be $1.3 billion as of the last actuarial valuation with funding set aside for this purpose of less than one percent of liabilities. Healthcare-related liabilities represent 40 percent of the county's long-term financial obligations.
The governor has reviewed the report and agrees with determination that Wayne County is operating under a financial emergency.
"Local leaders have taken important steps toward resolving the financial crisis that has challenged the county for several years, but the review team's report clearly shows that a financial emergency exists," Snyder said in a news release. "Chronic financial crises will only grow worse, and the possible solutions will be far more difficult, if the crisis is not addressed immediately. Restoring Wayne County to a secure financial foundation will ensure residents will continue to get the services they need."
Wayne County has about 1.7 million residents and is mired under a $52 million structural deficit. Property tax revenue in the county has declined by more than $156 million since 2007, while total expenditures increased by more than $50 million, according to the preliminary review.
Earlier this month, the Local Emergency Financial Assistance Loan Board determined probable financial stress exists in the county.
Read back: Wayne County in 'probable financial stress'
County Executive Warren Evans in June asked the state to declare a financial emergency. Evans said he wants to enter into a consent agreement with the state that will allow the county to continue negotiations with its stakeholders. A consent agreement also would provide for remedial measures to address a financial emergency and may use state financial management and technical assistance to help alleviate it.