Bill Johnson, a Republican candidate for governor in Alabama, said he plans to propose that the state create a Bond and Public Financing Oversight Commission.
Johnson supports the oversight commission because of difficulties being faced in Jefferson County, which has $3.2 billion of troubled sewer debt and owes $766.3 million in swap termination fees.
In an interview, Johnson said he proposed the oversight body to Gov. Bob Riley in December. Johnson commissioned a report on other states’ practices from the Center for Government and Public Affairs at Auburn University at Montgomery while he was director of the Alabama Department of Economic and Community Affairs. He resigned in June to run for governor next year when Riley will be term-limited out of office.
The Auburn report noted “there is no real financial monitoring statutory oversight in place within Alabama.” It reviews oversight programs in Georgia and North Carolina, as well as one being developed in Virginia. It also suggests ways Alabama could implement its own system.
Johnson said he wants a commission to review all issuance by public entities in Alabama, publicize fees, and establish a risk rating of the transactions to help cities and counties.
“My idea was to take this … and go to the rating agencies and ask them … if this would give them more confidence in what we’re doing in Alabama to ensure that we never have another Jefferson County,” he said.
Johnson said he asked Riley to back an oversight agency because he believed the time it was taking to resolve issues in Jefferson County was causing problems for the rest of the state. Riley did not act on his suggestion, but Johnson said he is carrying it forward in his campaign because he believes bond oversight would help maintain or improve credit ratings.
In a meeting last week with business leaders in Birmingham, Riley reportedly said the state should do everything it can to help Jefferson County avoid filing for bankruptcy, which would place “a toxic cloud” over the county, according to a Birmingham News story.