Alabama's Jefferson County makes massive job cuts

BIRMINGHAM, Alabama (Reuters) - Alabama's debt-ridden Jefferson County laid off about two-thirds of its 3,600 employees on Monday because of plummeting revenues, a move that will sharply curtail services in areas ranging from roads to courthouses.

The cuts are just the latest blow to Jefferson, whose population of 660,000 includes Birmingham, the state's largest city and its economic powerhouse. They come after the county racked up around $4 billion in debt by using exotic financial instruments to fund a revamp of its sewer system.

The work-force cuts will hit the roads and transportation, revenue and security departments, and reductions will also affect the courthouse and information technology department as well as laborers paid on an hourly basis, according to a senior county official.

One senior county employee said his land development department was slashed from 29 employees to just eight but they were nevertheless adjusting, a process eased because there were fewer queries from the public on Monday.

"Our traffic has slowed (because) ... people are following the news. People did not take a chance by waiting until this week to do their business," said Bo Duncan, deputy director of land development at the county.

"We are having to make do," he said.

For some families, the layoffs were particularly hard, he said, adding he knew one family in which both husband and wife had lost their jobs.

Jefferson County has been forced to make drastic cuts because of a lawsuit questioning the legality of a county occupational tax, which raised $78 million annually and was vital to the county's operation.

Although the revenue is still being collected, it is being held in escrow under orders from an Alabama Supreme Court justice pending a decision on the tax case. Some members of the state Legislature hope to pass a new tax bill this month to raise revenue for Jefferson County.

County workers placed on administrative leave under the cuts will be entitled to unemployment and some health-care benefits and will be called back after 45 days, according to a senior county official.

(Additional reporting by Verna Gates, writing by Matthew Bigg, editing by Jim Loney and Jan Paschal)