A Republican candidate for governor is promising to create a state bond oversight commission to help overcome difficulties Alabama issuers face due to the sewer debt crisis in Jefferson County.
The creation of such a commission was cited Monday by Bill Johnson as among the “first priorities” he would implement upon becoming governor.
“The main source of the economic crisis in America is the freezing of the credit markets,” Johnson said in a news release. “This is largely due to uncertainty in the market and has been compounded in Alabama because of the Jefferson County sewer debt fiasco. This led to a real challenge for our municipalities and utilities that have funding streams and revenue to support bond issues, but can’t get to the credit markets.”
Johnson said access to the credit markets is crucial for Alabama but uncertainty about a resolution to Jefferson County’s crisis “causes potential investors to hesitate in locating or expanding businesses in our largest county and even in our state.”
To help unfreeze the local credit markets, Johnson said he would create a Bond and Financing Oversight Commission to review and publish details of public financings by cities, counties, and public utilities in hopes of reassuring investors and the credit markets “that another Jefferson County will never happen again.”
He pointed to a December 2008 study by Auburn University at Montgomery about restoring investor confidence in light of Jefferson County’s sewer debt problems, arrests and convictions related to the sewer system and its financing, and the bankruptcy filings of several municipalities in Alabama.
The AU report noted there is no state-mandated financial monitoring oversight in Alabama. It also reviews states that assist distressed local governments and municipal finance oversight programs in North Carolina, Georgia, and Virginia.