Wayne County finances: The time has come
DETROIT – A while back I blogged this same story, but it's worth repeating here today.
Wayne County Executive Warren Evans has asked the state to come in and look at the county's books to see if there is a financial emergency -- as if there is any doubt. That confirms we heard the year's funniest joke, so far, back in January!
During the auto show at Cobo Center, L. Brooks Patterson, using his usual rapier wit, put Evans' election into perspective at the Big 4 event. When asked by Carol Cain what advice he would give Evans he said, "Ask for a recount." It spoke to the thankless job Evans had agreed to do by running in the first place.
Evans and I laughed about it again this morning because it is funny. It is a gallows type humor, though, considering there is NOTHING funny about the disastrous financial straits Evans and the county now face. I was curious whether Evans agreed to run knowing state assistance/intervention was inevitable.
"Knowing that this day was likely, but not inevitable," he said. "You really don't know how it is until you get there."
He admitted the financial condition was worse than he anticipated and when he took office he brought in a team to try to see if there was a way to cut Wayne County out of its financial hole. There isn't. This, of course, you knew by reading the stories in this blog over the past two years. Wayne County's financial problems are so vast that nipping around the edges of the ledger is insufficient to the task. Evans made some strides carving roughly $25 million off the $52 million deficit this year.
I'm told Evans planned on making his announcement today but word leaked last night and he released his request to the state at about 5:15 p.m. Wednesday instead. He is requesting the State of Michigan's Treasurer's Office send a financial review team into the county to look at the books and determine whether a financial emergency exists. This is a legal process with timelines and time limits written into the law. Technically, this is supposed to take 45 days or so. But let's face it: the state has been looking at Wayne County's books for the past several years. There are no secrets here. The county has an emergency and Evans is touching all the legal bases he is supposed to in his request to the state. It shouldn't be too long now that the governor declares the financial emergency.
Evans did an interview with Local 4 today and I asked him "why now?" as the timing of his request to the state seemed a bit odd. Evans, in trying to show this is a preemptive strike and not a desperation move, said: "When you see an iceberg out there you try to steer away from it before you hit it and that's what we're trying to do." But in thinking back to Evans' answer to Patterson's joke, he was steering before he ever got into the boathouse!
No, he knew that if the finances were really as bad as billed the state's new Public Act 436 offered him some different tools than it did Detroit a couple of years ago that would give him the boost he needs to succeed at righting his errant and rudderless ship. He could ask for an emergency manager, a consent agreement (Evans wants this one), neutral evaluation (otherwise known as "bankruptcy light") and Chapter 9.
Evans is asking for that consent agreement where he negotiates with the state for his deficit elimination plan because he gets to use a very useful "tool," as he called it: the ability to impose contracts. If he doesn't get the kinds of savings from unions or vendors he wants, he will have the power formerly only reserved for emergency managers. Evans swears he is going to negotiate to the bitter end but wants to have that hammer to get what he needs, not what he can negotiate.
Considering he finished his plan in April, the only question left here is whether that plan goes far enough to solve the county's deficit posture. That is what the review team will look at and bring to the governor to get that determination whether an emergency exists. The County Commission must approve the final consent agreement and then Evans is free to start doing the heavy lifting of cutting and hacking away at the county's deficit.
Now, there is another important point you need to know about this process. All it will do is attack, through ripped up union and vendor contracts, the county's budget deficit. It will not right many of the wrongs of the past several years such as alleviate mandated jail guard overtime, $30 million a year in deficit spending in the Sheriff's Office or fix that rusting, rotting hulk of an attempted new jail construction at the city's gateway. You see, those can't be dealt with until after the county gets its finances in order to the extent it can successfully float bonds -- borrow money -- at a good interest rate to solve larger problems.
I asked Evans when he thought this process of asking for the State Treasurer's help, getting it green lighted and then getting the state out of Wayne County's business would end. He told me "by the end of next year." So it's looking like we are still years away from Wayne County finding the same kind of relief and upward momentum Detroit now enjoys post-bankruptcy.
That means Wayne County and its 3,500 employees, 5,500 retirees and thousands of taxpayers are going to endure a tough time into the immediate future. Will Evans then run for re-election with an economic tailwind? Perhaps, if things go the way he would like. And perhaps he won't have to suffer recount jokes in 2018. The employees and residents of Wayne County can only hope so.
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