CHICAGO — Michigan has conditionally approved Wayne County's deficit elimination plan, easing immediate concerns of a state takeover, county officials said Wednesday.
Wayne County Executive Robert Ficano said the approval was a "watershed moment" for the struggling county, which includes Detroit.
"If we're talking about emergency managers, it's definitely a step in the right direction to avoid that," Ficano said, according to the Detroit News. "It allows the county to have control of its own destiny."
Michigan treasury officials reportedly sent a letter to the county earlier this week that said the county board must approve the plan or submit an alternative plan by the end of the month. The county must also report general fund cash flow and spending for the next 12 months, the state said.
The deficit elimination plan includes wage cuts and layoffs, changes to pensions and retiree health care programs, and one-time revenue enhancements.
Wayne faces a $175 million deficit. That's estimated to grow to $236 million in the next two years without action, according to the county.
The deficit plan relies on selling the county's wastewater treatment system for $121 million. Officials want to create a new authority to take over the system and issue bonds to finance an upfront cash payment. Wayne also wants to transfer $81 million into the general fund from its delinquent tax revolving fund.
The county has seen a series of downgrades over the last year due to its declining fiscal position. Moody's Investors Service rates its limited-tax general obligation bonds Baa3 with a negative outlook. Standard & Poor's rates them BBB-minus with a stable outlook, and Fitch Ratings maintains a BB-minus rating with a negative outlook.
The county has $726 million of outstanding LTGO debt.
