CHICAGO — The Wayne County, Mich. board of commissioners Thursday approved county Executive Warren Evans' reorganization plan, as the county tries to stave off a state takeover.
The board unanimously approved Evans' plan to eliminate various departments and consolidate others. It's expected to save $3 million in the general fund and is part of a larger restructuring.
The county faces a $52 million structural general fund deficit.
"My team and I invested a great deal of time and thought into how the county should best serve our residents and businesses," Evans said in a statement. "It represents the 'new Wayne County' — how we need to work to provide services more efficiently and effectively."
The county, home to Detroit, is trying to stave off a state takeover that Evans has said is inevitable without major changes.
The reorganization plan approved Thursday is part of a larger recovery plan that Evans unveiled in April. That plan would eliminate the structural deficit by eliminating retiree health care, increasing employees' retirement age, and make various pension changes.
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, that 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.
