Loan board examines preliminary review, finds Wayne County to be in probable financial stress

Associated Press

A state board that examined a preliminary review of Wayne County's finances said Wednesday the entity is operating under probable financial stress.

The state's most populous county is the latest government entity whose fiscal future could be determined by the state, as Gov. Rick Snyder is mandated by law to appoint a review team to go over the county's finances.

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"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," state Treasurer Nick Khouri said.

Khouri chairs the Local Emergency Financial Assistance Loan Board, which looked at the Treasury Department's two-week review before announcing its ruling in Lansing.

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.

County Executive Warren Evans last month 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.

Evans spokesman Lloyd Jackson said in an email that the decision "is part of a process that will allow a financial review team to go deeper into the dire state of Wayne County's finances. This administration will continue to work hard and be transparent through each phase of this process, working with the County Commission as we remain committed to our financial recovery plan and wait for a final decision from the state."

If a financial emergency is found to exist, county officials could select one of four options to fix it: a consent agreement with the state, the appointment of an emergency manager, a neutral evaluation or Chapter 9 bankruptcy.

The state appointed bankruptcy attorney Kevyn Orr as Detroit's emergency manager in 2013. That July, Orr made Detroit the largest U.S. city to file for bankruptcy. The city emerged from Chapter 9 in December 2014, shedding or restructuring $7 billion in debt.