BIRMINGHAM, Ala, April 18 (Reuters) - Alabama legislators on Wednesday rejected proposals to reinstate a jobs tax for the state’s bankrupt Jefferson County, whose leaders argue that the tax was needed for the county to work out the largest U.S. municipal bankruptcy case ever filed.
State lawmakers from Jefferson County, meeting as a delegation, rejected by 12-3 votes two bills that would revive the county’s occupational tax and generate about $60 million a year for cash-strapped Jefferson County, which has slashed government spending and laid off hundreds of workers.
The tax was tossed out in 2011 by Alabama’s top court. A replacement must be okayed by the Republican-controlled state legislature, which has unusually broad authority over the finances of local governments in the state.
In place from 1988, the tax provided $75 million in revenues and was one of the few sources of income that county officials could allocate freely. Nearly 44 percent of Jefferson County’s tax revenues are dedicated to specific programs and costs, according to Jimmie Stephens, Jefferson County Commissioner.
Other plans to ease the county’s cash crunch were in the works and one may be passed before May 21, when the legislative session must end, according to county and state officials.
“We are working on a framework we can all agree on for bi-partisan support,” said state Representative Paul DeMarco, a Republican and co-chair of the Jefferson County delegation.
All aspects of county finances were being reviewed, including the county government’s Cooper Green Mercy Hospital for indigent patients, DeMarco said. Republicans want to turn the underused facility into clinics, while Democrats staunchly support keeping the hospital open.
The Jefferson County delegation of state lawmakers, which must sign off on any revenue deal for the county, has been reluctant to aid the struggling county as it has squandered millions of dollars in corrupt deals over the last 20 years.
Five former county commissioners and 16 others have been found guilty of corruption tied to the Jefferson County sewer system, whose $3.16 billion of debt was a key driver of the county’s $4.23 billion bankruptcy filing in November.
“They have reason not to trust us, but this is a good group of commissioners,” said Jefferson County Manager Tony Petelos.
A revenue fix is critical to give the county, which is Alabama’s most populous and home to Birmingham, a strong position to negotiate with creditors during the bankruptcy proceedings, according to Petelos. (Additional reporting and writing by Michael Connor in Miami; Editing by Leslie Adler)