Lawmakers Should Act

The Birmingham City Council Tuesday approved a resolution urging Jefferson County’s legislative delegation to reinstate an occupational tax or give the county limited home rule.

Alabama’s largest county filed a Chapter 9 bankruptcy petition in November after failing to negotiate a restructuring agreement for $3.14 billion of sewer debt, and after legislators failed to authorize a replacement jobs tax that supplied as much as 40% of its general fund revenue. The previous tax had been struck down in court.

Counties in Alabama do not have home rule, and only lawmakers have the power to set ad valorem millage rates and

authorize other kinds of taxes and fees.

Some local lawmakers had said they would not agree to a replacement tax unless the county filed for bankruptcy in an attempt to avoid raising sewer rates. The annual legislative session is half over and no financial assistance has been considered.

Jefferson County is expected to run out of funds, including fees collected through legal settlements, by the end of the fiscal year in September.

A number of appeals by creditors and others involved in the bankruptcy could lengthen the time it takes to resolve the case and increase costs.

In a recent interview, County Commissioner George Bowman said he had asked fellow board members to retract the bankruptcy petition because it’s costing more than $1 million a month in legal fees, and the county has already paid more than $20 million.

He said attorneys have predicted it could take three years for the county to emerge from bankruptcy. Bowman, who voted against filing for Chapter 9 last year, said he believes the county could reopen negotiations with creditors holding the defaulted sewer warrants and structure a deal without substantial rate increases.

“Nobody is getting paid ... but lawyers,” he said.

Commissioners have not publicly discussed Bowman’s request to withdraw the case.

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Alabama
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