CHICAGO -- Wayne County, Mich. plans to erase a major chunk of its deficit by shifting more money than expected from its delinquent property tax fund into its general fund.
The move comes a week after the county auditor general accused county Treasurer Ray Wojtowicz of withholding the money, even as the county has tottered on the edge of a state takeover due to a $175 million deficit.
The treasurer has since agreed to release $150 million from the Delinquent Tax Revolving Fund. The county's deficit elimination plan originally relied on the use of $81 million from the fund.
County Executive Bob Ficano said the delinquent property tax funds would "put a great amount of distance between us and an emergency manager," according to local reports.
Wayne is fending off state intervention with the deficit elimination plan. The plan relies on the delinquent fund transfer as well as $121 million from the sale of a wastewater treatment plan and wage and benefit cuts. The county's board of commissioners approved the plan on May 15.
The county, home to bankrupt Detroit, is clinging to its investment-grade ratings from Standard & Poor's and Moody's Investors Service, which rate it BBB-minus and Baa3, respectively. That's one notch above speculative grade. Fitch Ratings rates the county BB-minus, which is in junk territory.
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.
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 county has $726 million of outstanding LTGO debt.
Meanwhile, a judge may decide this week whether a lawsuit challenging the county's struggling pension fund can win class-action status.
Two retirees sued the pension fund in April in Wayne County Circuit Court. The lawsuit accuses the pension trustees of bad and negligent investment choices that have led to a funded status of 46%. That's down from 100% status the system enjoyed in 2003.
A hearing on whether the lawsuit can be certified as a class action is set for Friday in the circuit court.
