New Deal Prompts New Direction in Jefferson County Sewer Debt Crisis

By Bettina Boateng
Weekend Anchor and Reporter/ Fill-in Weathercaster
Published: October 7, 2008

JEFFERSON CO. Ala. — In the latest move to save Jefferson County’s Sewer System from declaring bankruptcy over its $3.2 billion debt, Governor Bob Riley is tackling two action items aimed at securing a deal with Wall Street Creditors.

This information comes less than 24 hours after a Jefferson County Committee passed a bankruptcy resolution that could allow the entire five member commission to vote on a Bankruptcy resolution before the end of the month.
However, now that creditors are offering to forgive nearly $1billion in hopes to resolve the county’s sewer debt debacle, this new deal has reenergized some commissioners and has revived a situation that many considered bleak and dead.
In effort to shore up the deal, Governor Bob Riley asked the US Department of Treasury for funds from the recently approved 700 billion dollar economic bail out plan.
Though many Jefferson County Commissioners are unclear about how much funds the county may be eligible to receive, Commissioners Bettye Fine Collins and Shelia Smoot believe that the request was a good move and that overall the county can not afford to deny this deal.

“This [deal proposed by creditors] causes Jefferson County to have an entirely different future. If we work this out, we would have a future. In my opinion bankruptcy would have clouded everything that the county would attempt at least in the next 20 years,” Commissioner Fine Collins said.

“We don’t know how it’s going to work [receiving fund from the US Department of Treasury] , we don’t have any clue.  No one is sure on how this bail out piece will work for counties. However, we are in the bill and hopefully that’s a positive,” Commissioner Smoot said.

In order for Jefferson County to accept creditor’s terms, state lawmakers will have to approve the use of public funds such as Jefferson County’s one cent sales tax. Governor Riley spoke with lawmakers on Tuesday to discuss what measures can be considered in efforts of approving the deal offered by creditors. 

Not everyone is motivated by this latest deal. Commissioner Jim Carns does not support the idea of using funds from the county’s one cent sales tax to pay off the debt.

“I did not think the legislature would buy into this [use of one cent sales tax funds]. If there is something, that can be worked out without the one cent sales tax I would say yes to the plan…but now it[the plan] does not have my blessing,” Commissioner Carns said.

For Carns, the option of bankruptcy is an option he strongly supports and is ready to approve when the opportunity is arises.

Meanwhile, the commission must wait for negotiations to end before any decision can be made. The Jefferson County Commission will hold a special meeting Thursday to approve another forbearance extension on the county’s 3.2 billion dollar sewer debt.