An Alabama circuit court judge last week ruled unconstitutional an occupational and business license tax that provides a major source of income for Jefferson County's general fund budget. Commissioners are appealing the decision, the Birmingham News reported.
Judge Charles Price struck down the tax with a prospective ruling that a bill authorizing the county to implement the tax last year was improperly advertised prior to a vote by the state Legislature.
Attorneys for the county filed a notice Tuesday stating they intended to appeal the decision to the Alabama Supreme Court, the newspaper said.
This is the second time the county's occupational tax has been found unconstitutional. In January 2009, circuit Judge David Rains threw out a previous version of the tax because of improper action taken by the Legislature many years ago.
Rains' ruling led to big budget problems. County commissioners took various budget-cutting actions and furloughed 1,000 county employees until the Legislature held a special session and passed a bill reauthorizing the occupational tax, which Price struck down last week.
While the tax dispute makes its way to the state Supreme Court, the county budget crunch is expected to be alleviated by receipt of $75 million as part of a settlement between the Securities and Exchange Commission and JPMorgan.
The money is part of an SEC settlement in November 2009 of securities fraud and other charges involving nearly $3.2 billion of troubled variable-rate and auction-rate sewer warrants and related interest-rate swaps Jefferson County sold in 2002 and 2003. The county has since defaulted on the warrants.
Without admitting or denying the SEC's charges, JPMorgan agreed to pay $50 million to Jefferson County, forfeit more than $647 million of swap termination fees, and place $25 million into a fund to compensate harmed investors. In October, the SEC decided that the county should receive the $25 million.