Jefferson County has finally asked Alabama lawmakers for assistance to help it pay off its troubled $3.2 billion of sewer debt. County commissioners made the request Tuesday as the Legislature is winding down its annual session over the next two weeks.
On a 3-to-2 vote, commissioners passed a resolution “to request that the Alabama Legislature enact into law legislation to authorize the county commission to levy a one-cent substitute sales tax to replace the existing one-cent education sales tax, the proceeds of which should be used first to pay education debt and then to pay sewer debt.”
The vote came after lengthy discussion among commissioners, as well as presentations from county attorney Jeff Sewell, and Patrick Darby, an attorney with Bradley, Arant, Rose & White LLP, which is working with Gov. Bob Riley to negotiate a debt-restructuring plan. The attorneys explained to commissioners the ramifications of the resolution as well as what happens if the county files for bankruptcy.
Commission president Bettye Fine Collins, who is a Republican, and commissioners Shelia Smoot and William Bell, both Democrats, voted for the resolution. Republican commissioners Jim Carns and Bobby Humphryes voted against the resolution and continue to believe that the county should file for bankruptcy in hopes of discharging some of the sewer debt.
Jefferson County has tried for more than a year to restructure nearly $3.2 billion of sewer debt, most of which is in troubled variable- and auction-rate mode. It also faces nearly another $1 billion of related swap and termination payments. Riley has facilitated a restructuring plan in which counterparties would forgive the swap debt.
The county’s sewer system doesn’t generate enough revenue to refinance the outstanding debt, so part of the plan calls for using excess collections from a local one-cent sales tax currently dedicated by state law to fund the capital needs of schools.
