LANSING - "Probable financial stress" exists in Wayne County, the Local Emergency Financial Assistance Loan Board determined Wednesday.
Pursuant to Public Act 436 , the three-member board made the decision after considering a preliminary review of the county's finances, conducted by the state Department of Treasury during the last two weeks.
The county has $52 million in structural deficit.
"While county officials have taken some important steps in an effort to remedy the current crisis, the county continues to face significant financial difficulties that must be addressed now," said State Treasurer Nick Khouri, who chairs the Emergency Loan Board. "Given the issues noted in the final preliminary report, many of which county officials agree with, we feel a finding of probable financial stress is warranted."
The final Preliminary Review report, in addition to several related documents, can be found on the Department of Treasury's website, under Local Government Services.
Under PA 436, following the finding of "probable financial stress," the governor shall appoint a financial review team consisting of the state treasurer or his designee, the director of the Department of Technology, Management and Budget or his designee, a nominee from the state Senate majority leader, and a nominee of the speaker of the House of Representatives. The governor may also appoint other state officials or persons with relevant professional experience.
If a financial emergency is eventually found to exist in a local unit of government, local officials determine how the crisis is remedied by selecting one of four options: a consent agreement; an emergency manager; neutral evaluation; or Chapter 9 bankruptcy.
Wayne County Executive Warren Evans has asked the state to declare a state of financial emergency. A review of the finances could take up to 30 days.
Wayne's financial troubles follow the city's emergence late last year from the largest municipal bankruptcy in U.S. history.
Detroit shed or restructured $7 billion in debt during its bankruptcy.
In March, Evans announced a spending freeze, which blocked the filling of vacant positions and pay raises for current employees unless mandated by union contracts. It also restricted overtime, travel and major repairs. At the time, the county's pension system was less than 50 percent funded.
Evans was elected in November and inherited an unfinished downtown jail project that ran nearly $100 million over budget. Work has been stopped on the jail.
Copyright 2015 by Graham Media Group. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.