Small Nebraska County In Big Financial Trouble

Posted on Mar 03, 2017 By Ed Woods

Attorney Ed WoodsThe Miami Herald recently reported on an interesting story from the State of Nebraska. The story illustrates that even government entities such as counties and cities can find themselves in deep financial trouble. Indeed, Jefferson County, Alabama and Detroit, Michigan are recent examples of this phenomenon.

It All Started with a Murder

According to the Miami Herald article, Gage County, Nebraska is in deep financial trouble. The trouble dates back to 1985 when a 68 year old lady named Helen Wilson was brutally murdered. Ultimately, three men and three women were convicted of the horrific crime and sent to prison. After decades in prison, these individuals were exonerated by DNA evidence which implicated a man from Oklahoma. The wrongfully convicted men and women filed a lawsuit in federal court against the county. In their lawsuit, the men and women claimed that investigators who were working the Helen Wilson homicide case ignored exculpatory evidence and focused on getting the murder of Mrs. Wilson to trial as soon as possible.

Wrongfully Convicted Awarded $28.1 Million

Last July, a federal jury agreed and awarded the wrongly convicted individuals a judgment of $28.1 million plus attorney’s fees against the county. Gage County, Nebraska reportedly does not have that kind of money to pay the judgment. The County is a rural county of 22,000 people and collects only about $8 million per year in taxes. Most of the land in the county is cropland. Nebraska law has a cap on how much revenue can be raised from property taxes. Due to this cap, Gage County could raise nearly $3 million more; however, this is far short of the judgment amount. Further, the median household income is only about $35,000 annually and the local farmers are struggling with low commodity prices.

As a result, the county may be forced to seek relief in the bankruptcy court.  However, there are many questions concerning how a bankruptcy filing would play out for this small county. Unless the large jury verdict is thrown out or cut down on appeal, bankruptcy for the county may be inevitable. However, unlike the city of Detroit bankruptcy case, Gage County does not have valuable assets it could sell off to raise money. The county’s assets are mainly a courthouse, bridges, roads and some equipment. These are, obviously, things that are needed to keep the county running.

A possible non-bankruptcy option is to seek a loan. However, the State of Nebraska isn’t willing to make the loan. Adding to the problems are the county’s insurance companies claiming that there is no coverage for the judgment. Commissioner David Carrington of Jefferson County, Alabama is quoted as saying, “Wow. They’re in a real mess.” County residents are very worried about how this will end and what effect it will have on their county.

This story illustrates that serious financial problems can plague government entities the same as such problems can plague individuals and families. If you and your family are facing a pending lawsuit which could lead to a devastating judgment or there is already a devastating judgment entered against you, you do have options. We can discuss these options with you and identify the best strategies to get you back on your financial feet again.