County is under consent agreement
The Wayne County Commission approved a consent agreement between the county and state in response to Gov. Rick Snyder's declaration of a financial emergency in Wayne County.
On June 17, Wayne County Executive Warren Evans requested that the state review the county's finances and declare a financial emergency under state law so the county could proceed toward a consent agreement. A series of reviews and reports followed, and Snyder declared the financial emergency July 30.
Among the items that led Snyder to declare a financial emergency in Wayne County, according to his report, were variances in the last four audits between revenues and expenditures ranging from $16.7 million to $23.7 million; unbudgeted expenditures, in violation of Public Act 2 of 1968; the unfinished jail project in downtown Detroit; and unfunded health care-related liabilities of about $1.3 billion.
The governor's declaration required the Wayne County Commission to choose one of four options - consent agreement, neutral evaluation (a form of mediation), emergency manager or Chapter 9 bankruptcy - by Aug. 6.
The Commission voted Aug. 6 to support of the consent agreement. A proposed consent agreement was negotiated between the county administration and state Department of Treasury, which the Commission approved Aug. 13.
What is a consent agreement?
A consent agreement, as it relates to financially distressed municipalities under Michigan law (Public Act 436 of 2012), is a pact between the state and a local government that sets guidelines to reach a clearly defined resolution of the financial distress.
The agreement between Wayne County and the state of Michigan includes:
- Remedial measures will be implemented to eliminate the county's structural deficit. A structural deficit occurs when an entity requires more money to operate than it has available.
- The separate powers of the Wayne County executive and Wayne County Commission are largely retained, keeping the county's operations in the hands of officials elected by the people.
- The county executive will have the additional power to impose contract terms on union employees whose contracts have expired, which affects almost all unions in the county.
- A series of reports must be filed with the state, including monthly reports of the county's cash flow and cash position, and quarterly reports on the status of implemented remedial actions, financial status and potential liabilities, including pending lawsuits or legal actions to which the county is a party.
How will residents be affected?
Generally speaking, most residents won't be affected at all. That's not say certain county programs won't be cut back or eliminated, which would affect those who use them. But no direct reduction of basic county services should be expected because of the consent agreement. County employees and retirees are being directly affected by the County Executive's plans to improve the finances. Changes in pay, health care benefits and retirement will be felt by active employees, and traditional health care coverage is being elimated for many retirees.