November 17, 2011 / 9:46 PM / 8 years ago

Jefferson County bankruptcy another Alabama "punt"

BIRMINGHAM, Alabama (Reuters) - They call it “Alabama Punting Syndrome,” and it has a lengthy history.

A manhole cover bears the logo/design of Jefferson County, Alabama August 9, 2011. REUTERS/Marvin Gentry

Jefferson County’s bankruptcy filing surprised many, but for Alabama politicians, it was another in a series of incidents in which local officials are unable to solve problems and instead “punt” them to the federal level.

Alabama citizens in the southern U.S. state in the past turned to federal courts to address segregation and healthcare issues when local officials have not responded.

Jefferson County became the latest example last week. After falling short of a negotiated deal with creditors owed $3.14 billion of sewer-system debt and unable to win state legislative approval to plug a hole in operating revenue, the county filed for a rare Chapter 9 municipal bankruptcy.

“The solution would be easy without the politics,” said Jefferson County Commissioner Jimmie Stephens. He added that members of the legislative delegation have individual answers to the problem.

It bodes ill for the prospects for politicians to rush to Jefferson County’s aid. The head of the commission that voted for bankruptcy laid blame at the governor and state lawmakers for not calling a special legislative session to raise taxes to help the county, the state’s most populous.

“We’ve had that happen so often in Alabama. The state punts problems to the federal government or federal court,” said Bill Stewart, professor emeritus of political science at the University of Alabama.

Since the early 1900s, Alabama has had an unusually strong state constitution that holds sway over many matters determined by cities, counties and towns in other states. Pointing to amendments that cover mosquito control practices, bingo and local bond issuance, critics argue that the power structure stunts economic growth and promotes needless conflict.

Perhaps because of that, state officials are reticent to interfere in local problems. Todd Stacy, communications director for Republican House Speaker Mike Hubbard, said traditionally in Alabama, local issues before the legislature need to be thrashed out by lawmakers from the area involved.

“Lawmakers from outside Jefferson County are not going to impose their will outside of the wishes of the Jefferson County delegation,” Stacy said.


In the late 20th century, lawsuits filed by Alabama citizens in federal courts included ones to end racial gerrymandering and to force the state to provide healthcare to prisoners, according to the book “Alabama Getaway” by Allen Tullos.

In 1963, George Wallace, the governor and noted segregationist, attempted to block federal court orders to integrate the University of Alabama and later, elementary schools in Huntsville. It took the intervention of federal marshals for the students to be admitted

Later lawsuits sought to fix standards of care for the state’s mentally ill.

One recent federal lawsuit wanted Alabama to change state limits on property taxes that some poor counties claim cripple local schools.

Now a federal court judge will determine how Jefferson County will deal with its enormous debt.

“It’s not something to brag about, like being number one in football,” Stewart said. “It’s a national disaster, but it hasn’t sunk in yet.”

While corruption, dysfunctional management and poor decisions got the county into deep debt from financing a sewer system upgrade, its tenuous fiscal situation was further hit by a court ruling in March that voided its occupational tax.

The 0.45 percent tax on earnings had accounted for about $70 million, or 44 percent, of the county’s operating revenue not already earmarked for other purposes.

Mark Griffith, a political science professor at the University of West Alabama, said county officials worked hard for a long time to try to resolve the problem and avoid “kicking it to court.”

Stewart said the inability of state lawmakers from Jefferson County, who are divided along political party, racial, and urban versus rural lines, to agree on a plan to restore the revenue has stymied assistance from the state.

There were signs that the delegation may come together on at least one issue - the court-appointed receiver for the sewer system.

State Representative Paul DeMarco, the Republican co-head of the House delegation, called a meeting for later on Thursday to muster support for the county’s attempt to have the bankruptcy court oust John Young, the receiver.

Stewart said if Republicans who control the legislature decide the county’s bankruptcy will hurt the state, “they can impose some discipline and get something done.”

Additional reporting by Melinda Dickinson and Michael Connor in Miami; Editing by Dan Grebler

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