Although quite a bit remains to be done before anyone would feel comfortable breaking out the champagne, it’s still safe to say that, overall, this has been a pretty good year for Wayne County Executive Warren Evans. Just over two years in office and he has already been named as the 2016 County Executive of the Year by the National Organization of Black County Officials (NOBCO) for his commendable accomplishments in getting the County back on track toward more sound financial footing. NOBCO Chairman Roy Brooks had this to say at the ceremony held earlier this year:
“Wayne County Executive CEO Warren Evans came into office and hit the ground running. He took over a county whose structural deficit, and unfunded OPEB liability was so high that the county was on the verge of state receivership. Sixteen months after taking the oath of office, Warren Evans reduced the county’s OPEB (Other Post Employment Benefits) unfunded liability by almost a billion dollars.”
All of which is true. And under normal circumstances this would probably be enough for Evans to be granted time to ride off into the sunset. But these are hardly normal circumstances for the country, let alone for Wayne County or Detroit. That being said, Evans agreed to discuss some of the top issues remaining as his administration moves toward its third year in 2017.
The Wayne County jail
“He’s (Dan Gilbert) made up his mind that he’s going to make an offer. There’s no question about it.
“If you could finish it (the jail) on the existing site and just be done with it, I’d be one of the happiest men in the world. I think the cheapest way to build is to complete it on the existing site. Cheapest to the taxpayers. So we’re in the range of $300 million is all I think Wayne County should have to pay.
“It’s [the current jail site] the cheapest, it’s the quickest, I think. But Gilbert will have a proposal that will try to get as close to that number and then say, ‘But I’m going to build you all new stuff. Somewhere else.’ Because that’s the only way he can do it. I said I’m in for $300 million. I’m sure he’ll try and stretch that number a little bit, but what he’s going to say is ‘I’m going to build you a new jail from scratch. I’m going to build you a new courthouse from scratch. And I’m going to build you a new juvenile detention facility from scratch.”
Warren said he suspects Gilbert may try to see if he can get Warren to come up with more money, but Warren says there’s “not much room to dance” because the money isn’t there.
“But it is possible he’ll come in here and say ‘OK. $300 million is what you’ve got? I’ll build you all new stuff for $300 million.’ Now I have to really consider it” because of the possibility of an all-new facility as opposed to a half-finished facility. “So I guess I’d say I’d never say never. But as of today we’re negotiating with Walsh Construction which is the company that showed the interest in building it and we’re going with the premise that we’ll build it on that existing site.”
However, “There is an IRS problem in that we borrowed money and we didn’t build a jail. And so, the previous administration was given breaks and they haven’t been used. So I don’t know what the outcome is, but there’s a potential penalty that could be significant for not doing what we said we were going to do the first time. That penalty becomes even more troublesome if we build on a different site [because the agreements were made for the current site]. And so the exposure could be up to $150 million.”
This would mean that even if Gilbert says he’s going to build all new everything for $300 million, Evans still has to worry about the possibility of getting bitten for $150 million in IRS penalties later on and how to cover that. Which means that even after Gilbert [potentially] comes through with a deal offering all new everything for the desired $300 million price tag, Evans might still be forced to remain on the current site “because the exposure is less.”
“We’ll have budget surpluses this year,” but the real issue is how long the county will have to apply those surpluses year after year toward the underfunded pensions and healthcare debt.
“We didn’t get rid of the debt, we just put a heck of a dent in it. Now our retirement is about 54% funded. It was 41% or so when we took over. It’s a big jump, but 70% [funded]” is more or less the benchmark of where they should be. “And that’s gonna take years because there will never be an $80 million windfall to wipe it out. If we stay on track we’ll be great. The problem is we have to stay on track for several years.”
As for the healthcare debt, it stood at about $1.3 billion when Evans took office. Now it’s about $500 million. “So we took $800 million out of it, but $500 million is nothing to sneeze at. We cut away part of it by restructuring health care so the obligations in the future weren’t as high.”
The pension debt load, once at $800 million, is now somewhere between $475 and $480 million, said Evans.
What’s next for regional transit?
“The obvious is, a whole lot of people didn’t feel that it [the RTA ballot proposal] had value for them. Whatever that was. As I looked at it, Wayne County passed it. Maybe not as strong as we’d like in some portions of it, but it passed. It passed in Washtenaw. And if I remember correctly it lost in Oakland, but just barely. So if you took Macomb County [out], which just beat it to death, then you’d have been all right. So I don’t know if the modification should just take Macomb County out of it. I mean, I wouldn’t want to take Macomb County out of it just for the sake of doing it, but I think the whole idea of having a transit system that makes sense is bigger than just Macomb County.”
“A significant number of people in the city of Detroit, number one, don’t have cars. And a significant portion on top of that got cars, but they don’t have insurance because insurance is crazy. And so if you get up in the morning and go to a job in suburban Detroit somewhere, whether it’s Wayne County or otherwise, that’s a heck of a stress factor worrying about when you’re gonna get stopped on your way to work. Because the truth of the matter is, when you get stopped, they’re gonna take your car and then you’re going to jail. I’ve never had to wake up in the morning and then wonder, well do I go to work today and take a chance on going to jail? That’s a stressful situation. Transit eliminates a lot of that because it’s a safe way to go, and hopefully it’s a reliable way to go.”