CHICAGO - Wayne County, Mich. Executive Warren Evans is consolidating various departments and services in what he says is the first phase of a restructuring to save money for the cash-strapped government.
The move is part of an effort to stave off a fiscal crisis and state takeover of the county, which is on track to go broke by next summer without major fixes.
Evans said Wednesday the current reorganization will mean $3 million in general fund savings from various departmental reorganizations that include cutting 50 jobs. Among them is the elimination of the Department of Economic Development Growth Engine, with the Michigan Economic Development Corporation taking over economic development for the county.
"There are too many chiefs and not enough Indians," he said during a press conference announcing the reorganization.
The former county prosecutor, who took over the county's top office in January, has said the county needs to cut $70 million a year to achieve structural balance. In early March he ordered a spending and hiring freeze across the county. He has also ordered $2 million in salary cuts.
In February, Evans announced that the county's fiscal condition was even more grim than he'd thought before taking office. Wayne could run out of cash by August 2016 without major structural changes, according to a new Ernst & Young audit.
The audit showed the county's operational deficit was higher than expected and, with a chronic structural shortfall, it was quickly burning through its remaining cash.
The county for years has run a structural deficit now estimated at $50 to $70 million. It has an accumulated deficit of roughly $161 million and a pension plan with a funded status that's fallen to 45% from 95% ten years ago.
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. Fitch Ratings, which already had junk ratings on the credit, downgraded it to B from BB-minus and kept the rating on negative watch in mid-March.
Wayne has just under $700 million of limited-tax general obligation bonds and $302 million of LTGO notes.
