Michigan governor declares fiscal emergency for Detroit's county

Reuters News
Posted: Jul 22, 2015 5:34 PM

By Karen Pierog

(Reuters) - Michigan Governor Rick Snyder on Wednesday declared that Wayne County, home to Detroit, is in a financial emergency, agreeing with the findings of a state-appointed review team.

"Restoring Wayne County to a secure financial foundation will ensure residents will continue to get the services they need,” the Republican governor said in a statement.

The review team, appointed on July 2, said on Tuesday that it concluded there was a financial emergency based on the county's out-of-balance budgets over the last four years and an estimated $1.3 billion unfunded healthcare liability.

Wayne County Executive Warren Evans requested the review last month, asking the state for a fiscal emergency declaration and a consent agreement to fix problems.

"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," Evans' spokesman said in a statement. 

Under Michigan law, local governments can choose between a consent agreement, emergency manager, neutral evaluation, or Chapter 9 municipal bankruptcy to deal with its financial emergency.

Detroit went through a similar review process that led to the filing of the biggest-ever U.S. municipal bankruptcy, which the city exited last December after shedding about $7 billion of its $8 billion of debt and obligations.