May 22, 2015
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The Many Interlocking Parts Critical to a Sustainable Fiscal Future. The Wayne County Board last evening unanimously approved County Executive Warren Evans’ reorganization plan—a plan which will now give the green light to consolidate county departments and reduce the county’s structural debt by about 5 percent—a savings Mr. Evans believes vital to averting a potential state takeover if the county—which surrounds Detroit—is unable to make major changes. Thus these changes, adopted last night as a first step and abrupt change in fiscal direction, have critical implications for Detroit’s fiscal sustainability and recovery, as well as Wayne’s. Wayne’s structural debt is a toxic fiscal product of its underfunded pension system and a $100 million drop in annual property tax revenues since 2008. At the time Mr. Evans took office, Wayne County was on course to be insolvent by August of next year, according to an Ernst & Young audit: Wayne has, for years, 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. Thus, the county’s elected leaders confront a hard fiscal road to sustainability ahead—and Detroit has, very much, a stake in that endeavor. The reorganization plan approved Thursday is part of a larger, structural recovery plan which Mr. Evans had unveiled in April. That plan proposes to eliminate the structural deficit by eliminating retiree health care, increasing employees’ retirement age, and making various pension changes. Under the plan adopted yesterday, the county would eliminate various departments and consolidate others as it begins its efforts to face down its $52 million structural general fund deficit. As County Executive Evans put it yesterday: “My team and I invested a great deal of time and thought into how the county should best serve our residents and businesses…It represents the ‘new Wayne County’ — how we need to work to provide services more efficiently and effectively.” Indeed, as Commissioner Tim Killeen (D-Detroit) said immediately prior to the vote: “This is the third reorganization that I’ve been here for, and I very much appreciate the negotiations, the coming together of minds (with the administration) on this…I think there was a lot more depth to this reorganization plan than I’ve seen in previous ones…I think overall it bodes well as the commission and the executive branch are trying to…get the county on a better path.” For his part, Mr. Evans notes: “(The plan) represents the ‘new Wayne County’ — how we need to work to provide services more efficiently and effectively for residents and businesses to live and grow.” Under the plan, the county will combine its Children and Family Services, Health and Human Services, and Veterans Services departments into a new department of Health, Veterans and Community Wellness. In addition, the plan also calls for shifting the Department of Economic Development Growth Engine’s functions to the Wayne County Economic Development Corp., a quasi-public agency—a move projected to eliminate 50 jobs. Nevertheless, getting there was not easy. Just as in San Bernardino, charter provisions hampered efforts: for instance, after county commissioners raised questions earlier this month about what they believed were potential violations of the county charter in the plan, Mr. Evans yesterday informed them that he and his staff had made some changes to address commissioners’ concerns: for example, the Senior Services Department was to be combined into the same department as Children and Family Services, Health and Human Services and Veterans Services, but, instead, the plan was revised so that senior services is to be reorganized into a separate department overseen by the director of the new health and community wellness department. Reversing fiscal directions and constructing a long term fiscal sustainability plan may be one of the greatest challenges of governance.