Forced to lay off nearly one-fourth of its workforce on Monday, Alabama’s Jefferson County – home to a quarter of all Alabamians – has become a warning klaxon for thousands of US municipalities that dabbled in risky municipal bond investments.
The county is, in effect, out of money. After a judge declared months ago that an occupational tax imposed to pay off a massive sewer bond was unconstitutional, officials were unable to take steps to avert the layoff of more than 1,000 county workers on Monday.
Residents looking to pay their taxes or renew their car registrations are now seeing Soviet-style queues in the few courthouses that remain open. The county has also said it has no money to bury indigent residents who have died.
“The cutbacks are draconian; it’s quite a mess,” says Paul Pecorino, an economist at the University of Alabama at Tuscaloosa.
Of course it was Mayor Langford, now on trial who orchestrated this disaster:
“The blame can be spread all around, but the bottom line is it makes you wonder if people [in county government] took even a basic home economics lesson,” says Sam Addy, director of the Center for Business and Economic Research in Tuscaloosa, Ala. “Can you balance your checkbook? If you can’t, then you can’t balance your credit-card account or anything else.”
Interest-rate swaps engineered by Mr. Langford, then the county commission chairman, in 2002 and 2003 were intended to reduce the county’s debt obligations for a $3.9 billion sewer system upgrade and expansion begun in the mid-1990s. But the moves had the opposite effect when credit markets froze up in 2008 and when the recession slowed anticipated growth and revenues. He is slated to stand trial later this month on money-laundering charges in connection with the interest-rate-swap deal; he has pleaded not guilty.
This is the tip of the iceberg.
Jefferson county has several issues which drive this. If you ever drove through the heart...Birmingham...you'd notice that it's a cesspool of crime. Most folks have zero interest in moving or living there. Strangely enough...there are a fair number of good-paying jobs in the region. So folks live one or two counties over...and drive by interstate to the job. They aren't residents and they can't vote for anyone there (hence, the job occupation tax is fixed to screw them over but they can't vote the idiots out).
ReplyDeleteThen you've got the incompetence within the city council of Birmingham and the county commission. Most of them ought to either be fired or placed in jail.
Finally...a $4 billion dollar water treatment system for a town that has a spiraling downward population trend? What sense does this make?