CHICAGO -- Hoping to avoid a state takeover, Wayne County, Mich., the junk-rated county that is home to Detroit, Tuesday unveiled a deficit elimination plan that relies on selling its wastewater treatment system.
The plan is a last-ditch effort to stave off a threatened state takeover. Gov. Rick Snyder has said in the past that an emergency manager is a possibility for the county, the state's most populous.
"If we don't take control of this situation and find a solution for ourselves, that solution will be found by others," the county's chief financial officer, Mark Abbo told county commissioners at a Tuesday morning meeting where he presented the deficit plan.
"More needs to be done," Abbo said. "This will affect all aspects of Wayne County. Everybody needs to share in the responsibility."
The plan relies on the sale of the county's three wastewater treatment plants to a new regional authority for an estimated $120 million. The county would also take over an $80 million fund now controlled by the treasurer that's used for local government loans, according to local news reports.
The county would cut wages and benefits, in part by shifting employees to the federal health care exchange. The shift echoes similar moves by Detroit emergency manager Kevyn Orr and Chicago Mayor Rahm Emanuel.
The deficit elimination plan would cut $175 million from the county's budget. Wayne faces a $220 million deficit, according to Fitch Ratings, which last week affirmed its negative ratings watch on the county of 1.8 million people and warned it faces "rapid financial deterioration."
"Fitch believes the county remains severely challenged to stem the decline in its financial position and show material improvement in the near term," it said.
"Fitch is concerned that the even deeper cuts planned for fiscal 2014 may not be enough for meaningful deficit reduction given other budgetary pressures," Fitch said. "The county's efforts to reduce its sizable deficit fund balance positions are hindered by persistent economic pressure and a limited revenue environment."
Like other southeast Michigan governments, Wayne has suffered steep drops in property tax revenue, which makes up the bulk of its general fund. Property tax receipts fell 25% from 2008 and 2013.
The county plans to issue $100 million of tax anticipation notes in March, according to Fitch.
"Inability to access the market in an economically feasible manner, given the recent uncertainty in the market for Michigan issuers, could negatively affect liquidity and would likely result in a downgrade," Fitch said.
Fitch rates the county's limited-tax GO debt BB-minus. Standard & Poor's rates it BBB-minus, one notch above speculative rating, and Moody's Investors Ratings rates it Baa3.