Bankrupt Jefferson County, Alabama, Lays off More Workers

Posted on May 08, 2012 By Bond & Botes, PC

Bankrupt Jefferson County in Alabama is laying off more government workers.  Lay-off letters have been sent to 75 employees of Jefferson County, the home of Birmingham. The county filed America’s biggest municipal bankruptcy last year.  The county already employs 700 fewer people than it did a year ago.

Unfortunately for county employees, according to County Manager Tony Petelos,   eighty more lay-offs are planned at the end of May.

County Commissioner, Jimmie Stephens, said that slashing expenses is the only way to balance the county budget, since the jobs tax that delivered $66 million in yearly revenue seems unlikely to be restored by state legislators. 

The state legislature controls taxation in Alabama.  This leaves county officials powerless to generate new revenue on their own authority.  The Jefferson County delegation of state legislators show no sign of agreeing on a bill at this time.  Without local support, the bill cannot pass in the current legislative session to end May 21. A delay in authorizing a new jobs tax or some other revenue fix will sour the county’s exit from Chapter 9 bankruptcy as it will be unable to show it can repay even reduced debts.

“They (the state legislators) can keep kicking the can, but every year without a fix adds a year to recovery,” David Carrington, Jefferson County Commission President, said.

The efficiency in public services might fall even further with so many lay-offs.  Right now the wait for car tags can take more than five hours.  According to Kathy Burleson, president of the Jefferson County Employees Association, morale is low and absenteeism is high for stressed out workers.

Last November, Jefferson County filed for its $4.27 billion bankruptcy after the unwinding of a tentative agreement that might have cut the county’s debt load by $1 billion.  Political corruption, the loss of a vital local jobs tax, and a massive sewer-system debt all led to the county’s financial problems.

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