After the Alabama Legislature adjourned May 16 without providing Jefferson County fiscal relief, the federal judge overseeing the bankruptcy case will be asked Thursday to give the county additional time to decide whether to reject a lease securing $82.5 million of revenue warrants, the county said in a court filing last week.
The special limited obligations were issued by the Jefferson County Public Building Authority in 2006 to finance the cost of purchasing land and building a new courthouse and jail in the city of Bessemer.
The authority leased the facilities to the county, which agreed to pay rent to service the debt.
The warrants are insured by Ambac Assurance Corp.
Jefferson County said the primary funding source for the lease payment was a legislatively approved occupational tax.
The Alabama Supreme Court struck down the tax, saying it was enacted improperly by state lawmakers.
“The Alabama Legislature has failed to lawfully enact a statute to replace the county’s lost revenue,” the county’s filing said.
“The loss of occupational tax revenue has resulted in the cessation of essential services, has impaired the county’s ability to satisfy its general obligations and has jeopardized the health, safety and welfare of the county’s citizens.”
Though state law requires the county to maintain a courthouse in Bessemer, “uncertainty regarding future revenue sources leaves the county unable to plan long-term funding,” including funding of the lease obligation, Jefferson County said.
An evaluation is under way to determine if there will be enough operating cash though the end of the fiscal year in September, and whether the county can continue to service the lease.
The county asked for the judge to extend the time it has to assume or reject leases though Sept. 27.
