DETROIT – Michigan's most populous county moved a step closer to state oversight Wednesday after Gov. Rick Snyder determined that Wayne County — which is home to the city of Detroit — is in a financial emergency.
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Snyder's announcement came a day after a state-appointed review team came to the same conclusion.
Wayne County, which has 1.7 million residents, faces a projected $171 million deficit by 2019 if remedial measures aren't taken. The governor said local leaders took "important steps toward resolving" the persistent financial crisis, but the review team's report clearly showed a financial emergency exists.
"Chronic financial crises will only grow worse, and the possible solutions will be far more difficult, if the crisis is not addressed immediately," he said. "Restoring Wayne County to a secure financial foundation will ensure residents will continue to get the services they need."
Snyder noted that a preliminary review of its finances found that Wayne County has had cash flow issues. County officials also had not filed adequate or approved deficit elimination plans with the Treasury department from fiscal year 2010 to 2012. The county also failed to submit a deficit elimination plan for 2014.
Wayne County's primary pension plan also only was 45 percent funded, Snyder wrote.
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The county's largest city, Detroit, went through a similar review several years ago. Snyder appointed an emergency manager over Detroit's finances. The city later went into bankruptcy protection, from which it emerged in December.
Wayne County has until 5 p.m. on July 29 to request a hearing on Snyder's determination. The hearing would be held the following day in Lansing, the state capital, before a state Treasury official. With or without a hearing, Snyder can either confirm or revoke his determination.
If it is confirmed, county officials will have the option of working with the state under a consent agreement, having an emergency manager appointed, receiving a neutral evaluation of its finances or filing for Chapter 9 bankruptcy.
County Executive Warren Evans, who took office in January, had 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 unions, retirees, bond holders and others to whom it has financial obligations.
"Our administration has been aware and fully transparent about the county's financial challenges," county spokesman James Canning said Wednesday. "Today's determination by Gov. Snyder confirms our findings that a financial emergency exists in Wayne County.
"We maintain the position that a consent agreement is the best option going forward."