Evans wants financial emergency declared for Wayne Co.

After months of searching for savings throughout county government, Wayne County Executive Warren Evans on Wednesday asked the state of Michigan for a declaration of financial emergency, potentially putting in motion eventual state intervention in the financially strapped county.

The move could land the county with a consent agreement, also known as a financial stability agreement. The request for help follows a string of warnings from Evans and his staff about the dire condition of the county's finances, including an estimated $52-million structural deficit and an unfunded pension liability of $850 million to $940 million. Evans, who has said the county could run out of money next year, unveiled a "recovery plan" earlier this year that seeks $230 million in cuts over four years, but the county's union leadership has been highly critical of the effort.

In a letter dated Wednesday to state Treasurer Nick Khouri requesting a preliminary review and declaration of financial emergency, Evans cites several factors that exist or are likely to occur that "threaten the county's ability to provide necessary governmental services essential to public health, safety, and welfare." Those factors include a projection that the county's accumulated unassigned deficit would grow from $9.9 million in 2015 to $171.4 million in 2019, a bond rating in junk status and the judgement levy this month in a pension case that will cost taxpayers an estimated $50 in a one-time property tax assessment this summer on a $100,000 house.

A financial review and declaration of financial emergency are remedies prescribed in Public Act 436 for municipalities that are in financial trouble.

Evans delivered a letter to Khouri asking for a declaration of a financial emergency in Wayne County. The city of Detroit was declared a financial emergency months before it declared bankruptcy in July 2013.

The county would continue to negotiate with stakeholders under a consent agreement, the release said.

"Our recovery plan provides a clear path to financial stability for the county, but we are keenly aware that our time frame to get the job done is quickly fading," Evans said in news release. "Throughout this process we are constantly evaluating where we stand and proactively seeking solutions to work ourselves out of this massive deficit. I am requesting this consent agreement because the additional authority it can provide the county may be necessary to get the job of fixing the county's finances done."

Evans' letter notes that "... the county's fiscal situation will continue to deteriorate without further remedial measures."

State treasury spokesman Terry Stanton said the treasurer and staff would review the request and next steps would be "forthcoming." He said Evans had requested an expedited review.

Stanton said the treasurer would first determine if a preliminary review is warranted. If so, the treasurer's office has 30 days to complete the preliminary review and final report. Within 20 days after receiving the final report from the treasurer, the local emergency financial assistance loan board would determine if probable financial stress exists.

If a finding of probable financial stress is made, the governor appoints a financial review team that has up to 60 days to perform a more in-depth study. Options for rectifying the situation could include a consent agreement or emergency manager.

"The effort to address the problem is to be commended," Stanton said. "We've had fairly regular contact with the county and are aware of some of the difficulties they have and will assist the county where we can going forward."

Sara Wurfel, a spokeswoman for Gov. Rick Snyder, said she is aware that the request was received, but she noted that several steps, including the preliminary review, would have to happen before a financial emergency would be declared.

"We appreciate the hard work of County Executive Evans and his team and their seriousness and diligence in addressing some longstanding financial issues. We stand ready to work with them," Wurfel said in an e-mail.

A consent agreement would give Evans leverage to institute pieces of his recovery plan that are meeting resistance from unions and others. But former county Executive Robert Ficano said last month that the existence of constitutionally mandated jobs such as the sheriff and prosecutor complicate the prospects for a workable consent agreement. Ficano's staff had drafted a possible consent agreement in 2013 and updated it in 2014, but he never signed off on the document, saying he believed the county was making progress on its financial goals.

A consent agreement would be designed to allow the county to maintain a level of local control while providing a plan for managing the financial crisis with state assistance.

Maria Miller, a spokeswoman for Wayne County Prosecutor Kym Worthy, declined comment on Evans' request. Paula Bridges, a spokeswoman for Sheriff Benny Napoleon, said the sheriff is "aware of the issue but doesn't have specific details," saying it would not be appropriate to comment.

Wayne County Chief Deputy Treasurer David Szymanski said "the treasurer was not informed of any such action if there is to be any."

Not everyone agrees that the county's finances are as bad as Evans asserts.

A Wayne County Commission staff financial analysis says the county's 2013-14 annual financial report "does not suggest that the county is at the brink of a financial explosion."

"In fact, by all accounts the financial condition of Wayne County has drastically improved over the previous years," the report said.

The commission's analysis noted that for fiscal year 2013-14, the accumulated deficit in the county's General Fund/General Purpose budget "has dwindled to $82.8 million from $159.5 million in FY 12-13."

Requests for comment from Wayne County Commission Chair Gary Woronchak, D-Dearborn, were left with commission spokesmen.

Commissioner Tim Killeen, D-Detroit, said officials had learned a bit about consent agreements from Detroit's experience and he expressed some reservations about the process.

"I don't want to go down the road of a consent decree unless it (can't be avoided), and I want to hear more from the administration about why it's needed," Killeen said.

In Detroit's case, a controversial consent agreement was fashioned between the state and the city in 2012 as the city was grappling with a more than $200-million accumulated deficit and long-term debt exceeding $12 billion. That effort failed to fix the city's finances, and emergency manager Kevyn Orr was appointed in 2013, leading the way to Detroit's historic bankruptcy that year.

Staff writer Paul Egan contributed to this report. Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence.

Today: Wayne County commissioners have a regularly scheduled meeting.

Upcoming weeks: The state treasurer would first determine if a preliminary review is warranted. The treasurer's office has 30 days to complete a preliminary review and final report.

Within 20 days after receiving the final report from the treasurer, the local emergency financial assistance loan board shall determine if probable financial stress exists.

If a finding of probable financial stress is made, the governor appoints a financial review team that has up to 60 days to perform a more in-depth study.

Options for rectifying the situation could include a consent agreement or emergency manager.