BRADENTON, Fla. — The Alabama Supreme Court yesterday upheld a local judge’s ruling that struck down Jefferson County’s occupational tax.

County Commission president Bettye Fine Collins said that the ruling could mean that the county will have to come up with $40 million to $50 million to be returned to those from whom it was collected. A local judge struck down the tax in January.

“It means tremendous continuing financial problems,” said Collins, who noted the county has already laid off about 1,000 employees and delayed payments on contracts and leases.

Collins also said that the county recently entered a forbearance agreement once again delaying a principal payment on $120 million of variable-rate general obligation warrants now being held by liquidity banks. The forbearance requires the county to make a partial payment of interest Sept. 1.

Because of Jefferson County’s severe financial problems, the Legislature met in special session recently and passed a bill that purportedly cured underlying legal issues that prompted the tax to be struck down.

Gov. Bob Riley signed the Legislature’s bill within hours after its passage on Aug. 14. His office could not be reached for a comment.

Collins said late yesterday that she had not spoken to county attorneys about the full impact the Supreme Court ruling would have on the county or the recently passed bill.

Occupational tax proceeds represent about one third of the county’s general fund. Since mid-May, the county has been required by the court to stop spending tax revenue and put collections in escrow. That is what prompted the county recently to lay off employees and severely cut county services.

In addition to the financial crisis caused by the occupational tax issue, Jefferson County also must deal with $3.2 billion of troubled variable- and auction-rate sewer debt and $766.3 million of swap termination fees. The twin crises threaten to bankrupt the county.

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