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Alabama panel OK's trimmed tax law for bankrupt Jefferson County
May 8, 2012 / 6:55 PM / in 6 years

Alabama panel OK's trimmed tax law for bankrupt Jefferson County

May 8 (Reuters) - A key Alabama legislative panel on Tuesday passed a bill allowing bankrupt Jefferson County to revive a local jobs tax but with changes that would reduce county collections and may delay full approval by state lawmakers and the governor.

An earlier version of the bill was approved last week by the State Senate and promised $60 million of annual revenue to cash-strapped Jefferson County, whose leaders argue that the jobs tax is vital to working out an exit plan from its $4.27 billion bankruptcy.

An amendment tacked onto the bill on Tuesday could derail reauthorization of the tax, which was killed last year by a state court, according to Jefferson County Manager Tony Petelos.

On Tuesday, State Representative Randy Wood from St. Clair County, near Jefferson County, added an amendment that limits the jobs tax to just residents of Jefferson County. The tax would not apply to people outside Jefferson County who commute to Birmingham, the region’s business hub in Jefferson County.

With the amendment, the anticipated $60 million in revenue meant for Jefferson County’s general fund would be reduced by 25 percent, according to Petelos.

With the change, the bill would face a second vote in the State Senate. With four working days left in the legislature’s annual session due to end May 21, getting the bill through both chambers may not be possible.

“We got a bill out of committee, which no one thought we could do. That’s progress,” said David Carrington, president of the Jefferson County Commission.

Four of the five Jefferson County commissioners were at the state house in Montgomery for the committee vote and were assessing the next step to find a financial fix to help the county emerge from bankruptcy, Carrington said.

The bill would allow any county in Alabama seeking relief from creditors under Chapter 9 of the U.S. Bankruptcy Code to levy and collect taxes for up to three years.

In Alabama, the state constitution grants all taxing authority to the state legislature.

Hobbled by massive sewer-system debt of about $3 billion, Jefferson County in November filed for bankruptcy after the unwinding of a tentative agreement that might have cut the county’s debt load by $1 billion. County finances had been also been damaged by political corruption and the loss of the occupational tax.

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