The move came after the Alabama Legislature ended its session Thursday without passing a bill in the Senate that would have provided major fiscal relief for the county, averting layoffs and other cuts in county services.
The bill allowing the county to raise several taxes and fees to collect up to $50 million in revenue had been passed by the House, and it had support from the county’s delegation in the Senate except for Sen. Scott Beason, R-Gardendale.
Beason blocked a vote on HB 650 in his chamber despite an impassioned plea on the last day of session from a fellow lawmaker who said that Alabama’s largest county would go bankrupt without the assistance.
The bill was proposed because the Alabama Supreme Court earlier this year struck down an occupational and business license tax that lawmakers approved in 2009. The tax brought $77 million in annual revenue to the county’s general fund.
The loss of that funding represented 44% of Jefferson County’s discretionary income, according to Commissioner Jimmie Stephens, who heads the finance committee. Other income is either earmarked legislatively or legally pledged to obligations such as debt service.
In opposing HB 650, Beason said the county has nearly $90 million in reserves that it could use to stay afloat until Sept. 30, the end of the fiscal year.
Those reserves are considered the county’s only source of liquidity since it does not have access to the capital markets due to its default on nearly $3.2 billion of sewer warrants. The non-recourse sewer warrants are similar to bonds and secured solely from revenues of the sewer system.
The county’s current problem has to do with its month-to-month cash flow due to the loss of the occupational tax.
Commissioners ordered county department directors to identify workers who will be placed on leave by this Friday, the end of the current pay period. Placing them on leave will allow employees to maintain some benefits.
Some of those placed on leave are likely to be permanently discharged, sources said.
Since the five sitting commissioners were elected last November, they have made budget cuts and hired a turn-around firm to “right size” county government.
When it became doubtful that the Legislature would pass HB 650 early last week, Stephens said then that commissioners were making a concerted effort to avoid filing for bankruptcy by laying off employees and make cuts in services.
“Without the reduction in [work] force there would be no alternative,” he said. “What we’re trying to do is keep operating within the cash-flow constraints in order for government to function and for us to meet our debt-service requirements. Based on my projections, we will be able to do both.”
Stephens also said that he did not believe that the County Commission would ask the governor to consider calling a special session of the Legislature to continue working on fiscal relief bills for the county.
Several lawmakers have suggested a special session as a possibility.
Placing employees on leave is expected to trim the budget by just over $12 million so commissioners will need to make additional budget cuts to make up for the partial year loss of the occupational tax.
In the coming months, they will begin working on the fiscal 2012 budget which will require deeper cuts because it will be based on a full year’s loss of the tax revenue.