Detroit — An unprecedented, state-ordered review of Wayne
County finances has found that reforms have yet to improve cash flow,
deficits are still increasing and the county is relying on disappearing
revenue streams to pay its bills.
County officials recently
received a 156-page study that found the county relies on money intended
for the disabled to plug cash shortages, and its general fund had a
negative cash balance of $104million last summer. Even so, the county
regularly overspends despite a $167 million budget that is expected to
grow by $40 million this year.
For about a year, aides to
Executive Robert Ficano have met almost weekly with state Treasury
officials about the situation. A few months ago, the state imposed new
spending and reporting restrictions on the county, but Ficano officials
acknowledge they have yet to solve the problem.
The county has hit
at least four of 18 triggers that would allow Gov. Rick Snyder to
appoint an emergency manager, but Ficano officials said any talk of one
is premature. "We don't need the state to come in and tell us we have
financial problems. We know we do and we're working on them," said June
West, a Ficano spokeswoman. "How many emergency managers is the state
interested in, able to or desirous of putting in place?"
State
Treasury spokesman Terry Stanton didn't respond to emailed questions
Monday about the situation or the study by Detroit-based consultants
Pierce, Monroe and Associates.
The study, the second phase of a
review that began last year and cost the state at least $365,000, comes
amid feuding about finances between Ficano and elected county officials
including Prosecutor Kym Worthy and Sheriff Benny Napoleon.
Ficano
staffers blame the officials for much of the overspending — especially
Napoleon, whose office is already $35 million over its $85 million
budget this year.
Napoleon and Worthy said they are chronically
under-funded. Worthy is suing on claims her $25.6 million budget is too
low and has withdrawn prosecutors from some misdemeanor cases, while the
sheriff's department successfully sued the county a few years ago over
funding of jail operations.
The Treasury has yet to sign off on
Wayne County's 2011 deficit elimination program. Last year, Ficano
withdrew a plan to solve the deficit by diverting unused grant money
when it became clear the state wouldn't sign on. Instead, he agreed to a
state plan that forces the county to report monthly spending in order
to insure the issuance of $90 million in bonds each year to pay its
bills before taxes are collected.
The rules empower the Wayne
County Commission to decrease funding for overspending departments, but
it has yet to do so, said Carla Sledge, the county's chief financial
officer.
Commission vice chairwoman Alisha Bell, D-Detroit, said
it's too soon to tell if the reforms are working or if the county is on
the road to an emergency manager.
"We have been trying to work out
our financial issues for a few years, but the decline in property taxes
and the exodus out of Detroit are contributing to them," Bell said.
"If
we don't continue to work to address the deficit, we definitely could
have (an emergency manager) but we are diligently working to avoid it."
The study spread the blame around. It found:
The
county relies on borrowing money intended for the disabled to pay its
bills. The county handled money for the Detroit Wayne County Community
Mental Health Authority, which receives some $500 million in state and
federal funds. Last summer, the county's general fund borrowed up to
$100 million to pay bills.
The pool will soon disappear because Snyder signed a bill making the agency a separate authority in October.
"The loss of the agency's cash in-flow … could cause the county to have serious cash flow challenges," the study found.
Sledge, the county financial officer, said the practice is legal, the money is repaid and services aren't affected.
Napoleon's
office deploys as many as 20 jail officers to other departments, such
as monitoring tethered inmates or drug enforcement. Doing so forces
other officers to cover the jail on overtime and balloons the budget.
Napoleon's
office released statistics Monday blaming much of the problem on jail
populations, which he can't control. His budget is set assuming an
average inmate population of 1,754. That's about 1,000 less than the
county has in jails or on tethers, the sheriff's office said.
In
"numerous" county accounts, budgeted amounts varied substantially — or
had no budget whatsoever. Sledge said the county is seeking an outside
consultant to recommend ways to increase efficiencies. She offered few
details but said the contract could come to the commission in the next
few weeks.
Commissioner Kevin McNamara, D-Belleville, said there's
little the commission — or an emergency manager — could do if elected
officials continue to win court settlements about funding. In addition
to the other suits, the county also agreed in 2011 to pay $50 million
and spend up to $300 million on a new courthouse to settle a funding
lawsuit with Third Circuit Court.
"The short story is the
commission isn't giving up the money. We're already holding the line —
people have found a way to get around us," he said.
"Unless somebody at the state level — the legislators and the Supreme Court — fix the system, we're not going to clean this up."
The
state tried to intervene, but bills stalled in the Legislature last
year to curtail such suits by changing state law so counties' chief
administrative officers or CEOs could sue over budgets.
"There is
no emergency manager that could clean up Wayne County's finance problems
because an emergency manager can't trump a court order," McNamara said.
jkurth@detroitnews.com
(313) 222-2513
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