BRADENTON, Fla. - In a tersely worded statement yesterday, Jefferson County Commission President Bettye Fine Collins criticized local legislators who oppose the plan negotiated by Alabama Gov. Bob Riley and the New York Insurance Department that would absolve the county of $1 billion of sewer debt and avoid filing the largest municipal bankruptcy in U.S. history

Collins statement was released with results of yesterday's meeting in which commissioners approved yet another forbearance agreement with liquidity banks and swap counterparties involved with the county's $3.2 billion of sewer debt and $120 million of variable-rate general obligation warrants.

Although the county has defaulted on some payments, the forbearance agreements mean that signatories have agreed not to take action to force payments until 5 p.m. Oct. 31.

"Our archaic, outdated Alabama Constitution gives the Jefferson County legislative delegation absolute and total authority and control over Jefferson County," Collins said yesterday. "Sadly the Jefferson County legislative delegation wants all the power and none of the accompanying responsibility."

Collins was referring to the fact that Alabama counties have limited home-rule power, and legislation pertaining to counties must be approved by the local legislative delegation, which has 26 members.

Many delegates object to a provision in the proposed sewer restructuring plan suggesting the Legislature modify an existing local one-cent sales tax so $26 million in excess revenues could be applied to the sewer debt.

Some delegates believe the county should use general fund revenues.

Collins said Jefferson already has made budget cuts and eliminated 146 jobs to balance the $650 million operating budget that went into effect Oct 1. However, she suggested it could make additional cuts, such as eliminating a 15% discount that some sewer customers qualify for, reducing the budgets for environmental services and roads, and closing or reducing operations at several satellite courthouses.

The cuts "will bring a lot of inconveniences to the citizens that we all serve," Collins said, though it would allow a settlement of the sewer crisis "without a bankruptcy which would destroy our county."

Local cities in the county have raised sales taxes to fund operations without opposition from the same lawmakers, Collins complained. She also said that local residents prefer using the one-cent sales tax rather than losing county services.

Details of Riley's plan have never been released to the public although it is believed to suggest that excess revenue from an existing one-cent sales tax be applied to the refinanced sewer debt.

The county sold $650 million of fixed-rate school warrants in 2004, $200 million of auction-rate school warrants in 2005, and $200 million of variable-rate demand school warrants in 2005 - all 20-year debt secured by a one-cent sales tax to finance local school construction. The legislatively authorized tax can only be used for school-related purposes.

Sales tax revenues in excess of those needed to pay debt service are used to redeem the school debt, according to bond documents. Those funds can be redirected by a court, the documents said.

The Legislature would have to authorize Jefferson County to apply the excess revenue to the sewer debt, and allow the tax to be extended since the sewer restructuring plan calls for the refinanced sewer debt to have 50-year maturities.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.