Detroit's county touts first budget surplus in 8 years

Reuters News
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Posted: Apr 05, 2016 12:02 PM

(Reuters) - Wayne County, home to Detroit, Michigan, ended fiscal 2015 with a general fund budget surplus for the first time in eight years, the county executive announced on Tuesday.

The comprehensive annual financial report for the county, which was placed under state oversight last year, showed a $5.7 million surplus for the fiscal year that ended Sept. 30, according to County Executive Warren Evans.

"Having a surplus for the first time in eight years is a significant achievement when you consider the financial challenges we faced just over a year ago," Evans said in a statement. 

A $52 million structural budget deficit and unfunded liabilities of $900 million for pensions and $1.3 billion for healthcare led Michigan Governor Rick Snyder to declare the county in a financial emergency last July. In August, the county opted to enter into a consent agreement with the state that set out measures to improve the county's cash position and reduce its liabilities.

Detroit's own financial emergency led to the state's appointment of an emergency manager in 2013 and the filing of the biggest-ever U.S. municipal bankruptcy, which the city exited in December 2014.

In his state of the county address last month, Evans said the county was able to reduce costs through new collective bargaining agreements with most of its unions and other measures.

Evans told the Detroit City Council on Tuesday that he is working on a plan to complete a jail project that had been halted due to cost overruns, while warning "it is going to be costly."

"I'm very comfortable that we will be able to borrow the funds to be able to complete the jail," he said.

Moody's Investors Service in February revised the outlook on the county's Ba3 general obligation debt rating to stable from negative, citing "diminished near-term fiscal challenges" due to reductions in pension liabilities and other operating expenses.

(Reporting By Karen Pierog; Editing by Phil Berlowitz)