Snyder declares Wayne County financial emergency

It’s official. Wayne County is in a financial emergency.

Gov. Rick Snyder on Wednesday agreed with the findings of a state review team about Wayne County's financial situation, and declared a financial emergency exists, meaning there will likely be some form of state intervention in the county's operation.

"After thoroughly reviewing the report of the review team, I concur with their conclusion," Snyder wrote in a letter today addressed to Wayne County Executive Warren Evans and the Wayne County Commission, one day after the review team wrapped up its work.

Now, the commission gets to choose one of four options for dealing with the emergency — entering into a consent agreement with the state; having an emergency manager; neutral evaluation, which is mediation; or bankruptcy. It's not immediately clear when the commission will meet on the issue, although a Committee of the Whole meeting is scheduled for Tuesday.

A message seeking comment was left for Commission Chair Gary Woronchak, D-Dearborn.

In Michigan, a consent agreement is entered between the state and a local municipality or school district to provide a remedy to local financial problems and create financial stability.

Unlike with an emergency manager, a consent agreement allows elected officials to remain in power, though they must adhere to conditions and actions prescribed by the state to alleviate the financial crisis.

The City of Detroit entered into a consent agreement in April 2012, and operated under it until filing for Chapter 9 bankruptcy protection in July 2013.

Snyder's letter detailing his decision gives the commission or county executive until 5 p.m. on July 29 to request a hearing on the matter. If a hearing is requested, it would be held the following morning before State Treasurer Nick Khouri or his designee.

Such a hearing would not be an original fact-finding proceeding, according to Snyder's letter.

"Its purpose would be to afford county officials an opportunity to indicate whether the findings of the review team report were supported by competent, material and substantial evidence on the whole record," Snyder wrote.

The governor’s decision comes a little over a month after Evans requested that the state review the county’s finances. He has said he wants a consent agreement, which would allow him to impose cuts to employee benefits even as the county is in negotiations with its unions.

Evans' spokesman, James Canning, issued a statement reiterating the administration's desire for a consent agreement.

"We maintain the position that a consent agreement is the best option going forward. We will seek a consent agreement that respects the roles of the Wayne County executive and commission, and gives us the tools to focus our efforts on resolving the $52 million structural deficit," Canning wrote.

Despite some recent improvements in Wayne County’s financial picture, such as an increase in property tax collections and a settlement over retiree healthcare, the state’s review team found enough dire news to conclude that a financial emergency exists.

In addition to an underfunded pension system and heavy healthcare costs, the review team noted that the county underestimated expenditures in three of the last four fiscal years by $16.7 million to $23.7 million, has not identified a resolution for its money-draining unfinished jail and struggles with ineffective communication.

After Snyder's decision was announced, two state legislators weighed in on the county's situation.

Sen. Patrick Colbeck, R-Canton, said the declaration of a financial emergency is no surprise and he hopes the situation can be resolved without the need for an emergency manager or a bankruptcy.

"It's really the balance sheet," Colbeck said. "It's all the stuff we've promised that we simply can't afford."

Colbeck said Warren Evans has been trying to confront the issues head-on and he is hopeful he can do that through a consent agreement.

State Rep. Wendell Byrd, D-Detroit, said the county needs financial help from the state, or Evans would never have asked the state to conduct a review. But an emergency manager is not the answer, Byrd said.

"If you need help, you need help," he said. "But just because you need help doesn't mean you have to give up your rights to govern."

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