Alabama County Set to Halt Services, Shut Buildings Over Budget

[Joanne98]

Source: Bloomberg

June 5 (Bloomberg) -- Alabama’s most populous county is preparing to stop road maintenance, close courthouses and shutter services for the elderly after a court struck down taxes that pay for about 35 percent of its budget.

Jefferson County, which includes Birmingham, released a plan to cut $52 million from its budget as it appeals the ruling against its business and occupational taxes to the Alabama Supreme Court. Without that revenue, the county has said it is at risk of running out of money as soon as this month.

The loss of the tax money was another blow to a county that has been struggling to avoid bankruptcy since last year, when Wall Street’s financial crisis caused its interest bills to soar on more than $3 billion of bonds.

The proposed cuts, released today by county Commission President Bettye Fine Collins, would slash deeply into the government’s services and also include closing a nursing home for the indigent, declaring a moratorium on enforcing zoning and littering laws, and scrapping local development contracts.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=awnY4WwTlTlA

[phantom power]

1. Hope their republican residents all enjoy their small govt paradise.

[WriteDown]

4. This was done by a judge after review...

I wish the article had more details on what part of the tax violated the law.

[depakid]

5. Look at it as a trial run for "rugged indivdualism."

[KamaAina]

6. Most of the residents are good Democrats.

http://en.wikipedia.org/wiki/Jefferson_County,_Alabama#2008_election_results

Although Alabama as a whole voted for John McCain by double digits, Jefferson County voted for Democrat Barack Obama. He won 52% of the vote in Jefferson County and 166,121 votes. John McCain won 47% of the vote and 149,921 votes.

But, but, it's in the South! How can there be any Dems there at all?? :sarcasm: :sarcasm: :sarcasm:

[Dappleganger]

13. Thanks for bringing that up.

I wonder how many elderly live there?

[dixiegrrrrl]

14. Thank you, KamaAina.

President Obama carried a lot of counties, actually, and got something like 43% of the state vote.

Birmingham has suffered under much corruption, financial shenanigans similar to what other states have, and the bill has come due.

[keepCAblue]

10. The mayor & other pols who caused the county to go bankrupt were all Dems

Dec. 1 (Bloomberg) -- Birmingham, Alabama’s mayor was charged with bribery and money laundering in connection with municipal bond and derivative deals while he was president of the Jefferson County Commission, according to an indictment unsealed today.

Larry Langford, a Democrat, was accused of soliciting $235,000 from William Blount, chairman of Montgomery, Alabama- based bond underwriter Blount Parrish & Co., and lobbyist Albert LaPierre. William Blount helped Langford get a $50,000 loan, and paid for jewelry, a Rolex watch, an Ermenegildo Zegna suit and clothes from Salvatore Ferragamo, according to the indictment. Blount Parrish received about $7.1 million in fees in connection with the deals, which refinanced debt issued for the county’s sewer system.

Langford, 60, “sold out his public office to his friends,” said U.S. Attorney Alice Martin in a news release. “Through a web of financing agreements, Langford required many institutions to use Blount as a consultant so Blount would make fees and, in turn, pay off Langford. It was a classic pay-to- play scheme.”

The charges depict influence peddling, once rife in the $2.6 trillion municipal bond market, migrating into the unregulated world of derivatives, which can provide Wall Street banks with fees 10 times larger than bond underwriting.

Encouraging Refinancing

In Jefferson County, banks made $120 million by encouraging the county to refinance almost all of its bonds using swaps, a strategy now threatening to bankrupt the county.

Blount, a former state Democratic Party chairman, and LaPierre, a former state Democratic Party executive director, were also charged in a 101-count superseding indictment. The men were first indicted in June.

Langford and LaPierre pleaded not guilty, a spokeswoman for Martin said. Blount’s arraignment was pending.

Langford, named in 60 counts, was also charged with filing false income tax returns. The government seeks forfeiture of $7.6 million from the three men.

“Mayor Langford would love to spend an hour talking to each and every one of you. But he has been advised against that and he’s got a city to run,” Langford’s lawyer Thomas Baddley said.

Surrendering to Officials

LaPierre, who was paid $219,500 by Blount for his help, turned himself in to the FBI in Birmingham today after learning of Langford’s arrest, said Joseph Fawal, his attorney. He said he hasn’t read the indictment, but will fight the charges as he has done in a civil case brought by the U.S. Securities and Exchange Commission.

“We’re going to defend it vigorously,” Fawal said. Attorneys for Blount didn’t immediately return requests for comment.

The bond and interest-rate swap deals have threatened Alabama’s most-populous county with the biggest municipal bankruptcy since Orange County, California, in 1994. Rates on $3 billion of adjustable-rate bonds surged as high as 10 percent when companies that insured the debt lost AAA credit ratings because of subprime-mortgage related losses.

Compounding the problem, interest-rate swaps the county bought from JPMorgan Chase & Co.,Bear Stearns Cos., Bank of America Corp. and Lehman Brothers Holdings Inc. as a shield against rising borrowing costs backfired. The rates the county paid on its bond climbed, while the variable rates banks pay the county under the agreements declined, pushing interest costs higher.

[NightWatcher]

2. (happeneing here too) a possible two week furlough of criminal court workers in Georgia

SAVANNAH, GA (WTOC) - Georgia governor Sonny Perdue is slashing a million dollars from the Georgia's Superior Courts' budget with just weeks left in the fiscal year.

It could mean a two week furlough starting June 14 and affect more than 500 Superior Court employees, 49 district attorney and public defenders' offices.

That means the Superior Courts would basically have to shut down for two weeks, possibly allowing many people off the hook in a court of law.
http://www.wtoctv.com/Global/story.asp?S=10473669

[Lone_Star_Dem]

3. There's a lot more to this story (JPMorgan Bonds connection)

JPMorgan sold Jefferson County a load of BS which they foolishly bought. They're now they're trying to get the SEC to sue JPMorgan over their losses.

Between 2002 and 2003, Jefferson County, led by current Birmingham Mayor Larry Langford, paid JPMorgan and a group of banks $120.2 million in fees for derivatives that were supposed to protect it from the risk of rising interest rates, according to a series of stories published by Bloomberg News in 2005. When interest rates unexpectedly fell, the county was unable to make sudden payments on its debt.

Near Insolvency

The public financings have pushed the county toward insolvency and more than tripled Jefferson County residents’ sewer bills.

The financing fees Jefferson County paid were about $100 million more than they should have been based on prevailing rates, according to estimates last year by James White, an adviser the county hired in 2007 after the SEC said it was investigating the deals.

Langford, the 61-year-old mayor of Birmingham who was president of the commission that approved the sewer financings, was charged in December with bribery, fraud, money laundering and filing false tax returns. His trial may begin as early as this summer, according to court documents.
http://www.bloomberg.com/apps/news?pid=20601015&sid=akHsc54e6TUg

May 22 (Bloomberg) -- As nighttime temperatures plunged in Birmingham, Alabama, last October, Dora Bonner had a choice: either pay the gas bill so she could heat the home she shares with four grandchildren, or send the Birmingham Water Works a $250 check for her water and sewer bill.

Bonner, who is 73 and lives on Social Security, decided to keep the house from freezing.

``I couldn't afford the water, so they shut it off,'' she says.

Bonner's sewer bills have risen more than fourfold in the past decade. So have those of others in Jefferson County, which has 659,000 residents and includes Birmingham, the state's largest city.

What's threatening to increase them even more isn't the high cost of treating waste; it's the way county officials chose to finance the $3.2 billion in debt they took on to build a new sewer system. The county relied on advice from a bank, JPMorgan Chase & Co., to arrange its funding, rather than use competitive bidding.

Like homeowners who took out mortgages they couldn't afford and didn't understand, Jefferson County officials rejected fixed- rate debt and borrowed instead at rates that varied with the market.
http://www.bloomberg.com/apps/news?sid=aF_f8gLLNvn0&pid=20601109

[donco6]

8. Derivatives are now illegal for public entities to hold.

Wonder when they got them?

[Name removed]

7. Deleted message

Message removed by moderator. Click here to review the message board rules.

[nosmokes]

9. nice response for indigent folks getting tossed outta their nursing home

Alabama or New York City,this is still America and we're better than this. Or we're supposed to be.How do we get there?It starts with each of us.

[Ex Lurker]

11. Look upthread. Those people you so callously dismiss voted for Obama n/t

[bluestateguy]

12. JeffCo voted for Obama

It was the first time that the county was blue since 1952.

[jody]

15. For ignorant readers & posters, Jefferson County voted 52% Obama v. 47% McCain.

Those who laugh at the plight of Jefferson County are savoring misery besetting fellow Democrats.