Gov. Rick Snyder determines financial emergency exists in Wayne County

Finding based on independent review team report

Wednesday, July 22, 2015

LANSING, Mich. -- Gov. Rick Snyder today agreed with an independent financial review team in determining that a financial emergency currently exists in Wayne County.

“Local leaders have taken important steps toward resolving the financial crisis that has challenged the county for several years, but the review team’s report clearly shows that a financial emergency exists,” Snyder said.

“Chronic financial crises will only grow worse, and the possible solutions will be far more difficult, if the crisis is not addressed immediately. Restoring Wayne County to a secure financial foundation will ensure residents will continue to get the services they need.”

The review team was appointed earlier this month, following a preliminary review requested by County Executive Warren Evans. County leaders have seven days to request a hearing before the state Treasurer or his designee.

In reaching his determination, Snyder cited several conditions outlined by the review team, including:

  • The county’s last four annual financial audits re­­vealed notable variances between General Fund revenues and expenditures as initially budgeted, as amended, and as actually realized. In addition, county leaders underestimated actual expenditures in three of the fiscal years by amounts ranging from $16.7 million to $23.7 million.
  • County leaders engaged in unbudgeted expenditures in violation of Public Act 2 of 1968, the Uniform Budgeting and Accounting Act.
  • Although there was agreement among county leaders that existing de­tention facilities are inadequate, there is no consensus about whether to complete construction on a new jail or to renovate existing facilities. 
  • According to the county executive’s recovery plan, unfunded healthcare-related liabilities were estimated to be $1.3 billion as of the last actuarial valuation with funding set aside for this purpose of less than one percent of liabilities. Healthcare-related liabilities represent 40 percent of the county’s long-term financial obligations.

County leaders now have until 5 p.m. on July 29 to request a hearing on the governor’s determination. Should a hearing be requested, it will be held at 10 a.m. on July 30, in Lansing, before the state Treasurer or his designee. Following the hearing (or if no hearing is requested by the county), the governor can either confirm or revoke his determination that a financial emergency exists.

If a financial emergency is eventually confirmed, Public Act 436, the Local Financial Stability and Choice Act, ensures local leaders have a strong voice in how a financial emergency is addressed by choosing one of four options: consent agreement; emergency manager; neutral evaluation; or Chapter 9 bankruptcy.

For more information about the PA 436 process, visit the Local Government Fiscal Health page on the Department of Treasury’s website (www.michigan.gov/treasury).

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Related Documents
Gov. Snyder's signed Wayne County Financial Emergency Determination PDF icon