CHICAGO - Wayne County Executive Warren Evans ordered a spending freeze as the Michigan government tries to stabilize its deteriorating financial position and ward off a state takeover.
"This is the first step to resolve the county's financial crisis," Evans said in a statement after he issued the executive order on March 9. "It's critical we begin to take the necessary steps to solve our financial crisis and restore fiscal health. Reducing expenditures wherever possible must be our first priority."
Evans also created an "executive review committee" to oversee the implementation of the freeze among other duties. The committee includes the county's chief restructuring officer, budget director, corporation counsel and Evan's chief of staff.
Under the freeze, all vacant positions will remain vacant and no employees will get a raise unless it's required under an existing contract. The order restricts overtime, travel, repairs, acquisitions and other expenditures.
Evans' order comes about a month after he announced that the county, which is home to Detroit, would run out of cash by August 2016 without major structural changes. He released an audit that showed the county's operational deficit was higher than expected and, with a chronic structural shortfall, it was quickly burning through its remaining cash.
Evans took office in January and said he didn't realize until he took office the seriousness of the county's financial position. A debt restructuring, state takeover and even bankruptcy are all on the table, Evans said at the time.
The county lost its last investment-grade ratings shortly after that, when Standard & Poor's downgraded it into junk territory in mid-February. Moody's Investors Service dropped it into speculative territory in early February, and Fitch Ratings already maintained junk status on the credit.
Wayne has just under $700 million of limited-tax general obligation bonds and $302 million of LTGO notes.
