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Jefferson County, Alabama

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Jefferson County is a county in Alabama. Its county seat is Birmingham. Home to approximately 700,000 residents, Jefferson County is Alabama’s most populated county.[1] The county's finances have been rocked by a scandal surrounding a sewer rehabilitation project that has resulted in the conviction of nearly two dozen county employees, contractors and advisers, including four former county commissioners.[2]

Website evaluation

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Transparency grading process

Last rated on October 5, 2012.

The Jefferson County website has released a press release extolling its A- grade from the Sunshine Review[3]. In 2011 the county earned a Sunny Awards for having a perfect website transparency score.

The good

  • Budget
    • Current budgets are published.[4]
    • Archived budgets are published.[4]
  • Meetings
    • Meeting schedules, agendas and minutes are posted.[5]
  • Elected officials
    • Commissioners are listed.[6]
    • Commissioners email addresses are listed, and county directory provides Commissioner's telephone information.[7][6]
  • Administrative officials
    • Some departments listed administrative officials with contact information.[8]
    • A County directory lists key administrative officials.[7]
  • Permits and zoning
    • Zoning information is provided.[9]
    • Building codes and fees are posted.[10]
  • Audits
    • Audit reports are published.[11]
  • Contracts
    • Open bids are posted.[12]
    • Awarded contracts are listed.[13]
  • Public records
    • A public records request form is posted.[14]
  • Local taxes
    • Revenue details are listed in budget documents.[4]
    • Information is provided on individual taxes and fees.[15]

The bad

  • Public records
    • A public records request contact is not listed.
  • Lobbying
    • Information is not provided on [government sector lobbying].


Budget

The county's fiscal year begins on Oct. 1.[16]

The FY2011 budget is posted on the county's site here. The General Fund available balance for the fiscal year was expected to be $ 312,397,208.[17]

Possible Bankruptcy

The county is considering filing for bankruptcy and has been working to avoid it over the past three years.[18] The county is liable for $6 billion, by far the largest government bankruptcy in history.[19]

A large portion of the county's debt stems from a sewer system overhaul, which was paid for in part by complicated bonds that resulted from corrupt deals and from which the county ended up $3 billion in debt. Elected officials, public employees and business people were convicted of rigging the transactions that contributed to the fiscal debacle.[20]

Plan

On September 16, 2011, The County Commission voted 4-1[21] to accept a plan to avoid bankruptcy, with Wall Street forgiving $1 billion of the sewer debt and the county refinancing the remaining $2 billion debt resulting from the sewer project. It also includes higher sewer rates.[20]


Governor Robert Bentley’s ability to persuade the Legislature to create an independent sewer authority to issue new debt backed by a "moral obligation pledge" from the state. Legislators also will be asked to shore up the county’s general fund, which faces a deficit o $40 million in its operating budget, after a state court struck down a levy on wages. The governor said he would call a special session to act on an agreement.[21]

Sources of Debt

$3.2 billion of the county's debt is from overhauling the county's sewer system starting in the mid-1990s[22] In 2002, the County Commission rushed to issue more than $1 billion in sewer bonds shortly before elections so their chosen bond dealers and other financiers would reap the financial windfall.[23]

Adding to the debt is a bond swap plan, a 2003 refinancing of the original fixed-rate bonds and a corrupt local government that accepted kickbacks in exchange for mangling the county's portfolio.[24] The county switched to floating-rate bonds to benefit from the low interest rates and it purchased billions in interest rate swaps.[24] Neither maneuver produced a profit and instead, the county ended up losing money in fees.[24]

Financial Guaranty Insurance Corp. and Syncora guaranteed the county's bonds, but those companies overextended themselves and, in 2009, Syncora could not make a $71 million payment, leaving the county wide open and spurring discussion of possible bankruptcy.[24]

Negotiations

President Collins recently said that she felt the Commission should have been more involved actively involved in the ongoing negotiations, which have been primarily handled by lawyers and local business leaders.[25] Recently, however, talks with Wall Street creditors regarding the sewer bond debt stalled.[26] Commission President Bettye Fine Collins said that she believe the reason was the fact that that court-appointed receiver has taken control of the Jefferson County sewer system and creditors want to see if he can offer a creditors a more lucrative deal.[26] No official talks or filings for bankruptcy over the sewer debt have taken place[22]. JPMorgan Chase & Co., Jefferson County's largest creditor, has announced that it will seek reimbursement of $400 million should it lose a lawsuit filed by one of the debt insurers[27].

Receivership

On Sept 22, 2010, Alabama Circuit Judge Albert Johnson appointed John Young as the receiver for the county’s sewer system after the Bank of New York Mellon, the trustee for nearly $3.2 billion of variable- and auction-rate sewer bonds. sought a receiver from the court.[28] The court found that the county violated covenants, defaulted on the bonds, and failed to pay $515.9 million of principal payments accelerated between June 2008 and July of this year. “The court finds that a receiver will be able to stabilize the system finances, and will also be able to implement significant operational improvements and efficiencies that will generate more system revenues and more net revenues available for debt service than Jefferson County previously produced,” the judge’s order said.[28]

The receiver is expected to raise sewer rates although Commissioner Jim Carns says a rate increase will be insufficient to pay off the debt.[29]

A court-appointed receiver Young released a report June 14, 2011, recommending a 25% rate increase starting Sept. 1, as well as some cuts.[30]

Commissioners' Stance on Bankruptcy

Commissioners discussed the possibility of bankruptcy following the Oct. 5, 2010, Commission meeting, although the bankruptcy was not addressed at the actual meeting.[22] Commission President Bettye Fine Collins said that she would "have no problem in filing for Chapter 9" should people "refuse to cooperate" with the county.[22] Commissioners Carns and Humphreys also support the bankruptcy filing.[22] At the Oct 5th meeting, the commission voted to pay a local firm $1.4 million to audit the county's books for FY2008 and FY2009, giving the county necessary information for sewer debt crisis settlement discussions.[25]

Budget Solutions

A lawsuit was filed which challenged the legal grounding for the county's occupational tax. As a result, Jefferson County has had to refund funds collected, which amounted to $66 million in the year 2010[31], approximately 20% of the total county budget. The County Commission has been pursuing other methods of raising funds, such as freezing merit pay raises[32] and selling off county owned property including land for a data center[33] and a county nursing home[34].

Public employee salaries

Jefferson County Attorney Jeff Sewell earns $375,000 annually. John S. Young, a court-appointed receiver, earns $500-per-hour salary.[19]

Taxes

Fiscal Year to Date Collections from Dec. 2008-Dec. 2009[16]

Tax As of Dec. 2008 As of Dec. 2009 % Change
Sales tax collections $21,171,986 $20,251,535 -4.35%
Occupational Tax $16,130,383 $15,284,094 -5.25%
Motor Vehicle Ad Valorem $17,254,309 $17,581,502 1.90%
Education Tax $21,281,768 $20,326,924 -4.49%
Business License Fees $6,803,822 $6,483,124 -4.71%

Lobbying

In 2008, Jefferson County reported $170,000 spent on lobbying.[35]

County Governance

Jefferson County is one of the eight counties in Alabama that has a limited-form of home rule government. This limited authority of home rule allows the county to be able to set up a zoning system for land use, maintain sewer systems and highways, provide for garbage and trash disposal, and to enforce taxation, except property taxes.

Five County Commissioners are elected from specific districts of the County.[1] Each Commissioner is responsible for administering assigned departments and functions of County government: Finance and General Services, Environmental Services, Roads and Transportation, Health and Human Services, and Information Technology.[1] The Commissioners choose one commissioner to serve as President of the Commission. The President is the Commissioner of Finance and General Services.[1]

Legislation in regards to a county manager position is in the works. The proposed bill seeks to reduce the contract period, as well as require a minimum number of years of experience[36].

County Commissioners[37]

Commissioner Responsible Departments District
David Carrington, President Administrative Services 5
Joe Knight Courts, Emergency Management, and Land Planning and Development Services 4
Jimmie Stephens Finance and Information Technology 3
Sandra Little Brown, President Pro Tempore Community Services and Roads and Transportation 2
George Bowman Health Services and General Services 1

The Jefferson County Employees Association represents approximately 830 Jefferson County employees.[38]

Corruption

Sewer Scandal

Nearly two dozen Jefferson County employees, contractors and advisers involved in the county's $3.2 billion sewer rehabilitation work have been convicted in federal court, and most were convicted of bribery and conspiracy.[39]

The following former commissioners have been convicted in the scandal:

  • A federal jury convicted former County Commission President and Birmingham mayor Larry Langford on 60 counts all stemming from his acceptance of bribes in exchange for him sending lucrative bond business to investment banker Bill Blount, a former chairman of the Alabama Democratic Party. [40] U.S. District Judge Scott Coogler sentenced Langford to 15 years in prison.[41]
  • Former county commissioner Mary Buckelew pleaded guilty to obstruction of justice for lying to a grand jury about her acceptance gifts from an investment banker as part of the sewer scandal. She was sentenced to probation and did not receive jail time.[42][43]
  • Chris McNair[43] was a former county commissioner who was convicted in 2006 of charges that stemmed from his receipt of over $850,000 in bribes from several sewer contractors. He was sentenced to five years in prison.[44]
  • Gary White, also a former county commissioner, was convicted of bribery and conspiracy and sentenced to ten years in prison.[2]

Other Convicted County Officials

In 2009, a federal jury found former commissioner John Katopodis guilty on all 97 counts of mail and wire fraud stemming from his misuse of funds of the charity Computer Help for Kids.[45] He was sentenced to three years and ten months in prison.[46]

Jeff Germany was convicted in 2006 of on four counts of misapplying county funds and one count of conspiracy for using social service agencies to gain access to thousands of dollars in taxpayer money for personal gain. .[47] He helped the group Alabama New South Coalition's Jefferson County Chapter screen candidates seeking its endorsement.[48]

External links


References

  1. 1.0 1.1 1.2 1.3 Jefferson County About Us
  2. 2.0 2.1 The Birmingham News "Gary White sentenced to 10 years in prison for bribes" July 30, 2010
  3. Press Releases
  4. 4.0 4.1 4.2 Budget
  5. Commission meetings
  6. 6.0 6.1 Commissioners
  7. 7.0 7.1 Directory
  8. Departments
  9. Zoning
  10. Inspection
  11. Audits
  12. Purchasing, Bids
  13. Contracts
  14. Citizen's Information Form
  15. Revenue
  16. 16.0 16.1 FY2010 First Quarter Review for Jefferson County, Alabama
  17. County Budget 2008-2009
  18. National Review Online, The Next Crisis Will Come from the States, Sept. 29, 2010
  19. 19.0 19.1 Red Tape Chronicles, 20 government workers with super-sized pay, Oct. 5, 2010
  20. 20.0 20.1 MSNBC.com "Huge bankruptcy averted? Alabama county to settle debt" Sept. 16, 2011
  21. 21.0 21.1 Businessweek "Alabama County Approves Debt Deal to Avoid Record Bankruptcy" Sept. 16, 2011
  22. 22.0 22.1 22.2 22.3 22.4 NBC13.com "JeffCo. Commission President now backs bankruptcy option" Oct. 5, 2010
  23. The Birmingham News "Our View: The Jefferson County Commission should wait to allow new commissioners to decide whether to sell the county's money-losing nursing home" Oct. 5, 2010
  24. 24.0 24.1 24.2 24.3 Money.CNN.com Fortune "Three American cities on the brink of broke" May 28, 2010
  25. 25.0 25.1 AL. com Birmingham News "President Bettye Fine Collins says Jefferson County Commission has been out of the loop on sewer debt talks" Oct. 6, 2010
  26. 26.0 26.1 MyFoxAL.com "Jeffco Commission talks with Wall Street stalling" Oct. 5, 2010
  27. AL.Com Jefferson County sewer crisis: JPMorgan says Jefferson County might owe $400 million Feb. 04, 2011
  28. 28.0 28.1 Bond Buyer "Alabama Judge Nixes Jefferson County Bankruptcy, Appoints Receiver for Sewer System" Sept. 22, 2010
  29. ABC3340.com "Collins says bankruptcy may be an option for Jefferson County" Oct. 6, 2010
  30. The Wall Street Journal "Alabama County Girds for Deep Civil-Servant Layoffs" June 16, 2011
  31. AL.Com Jefferson County occupational tax refund should go 100% to taxpayers, lawsuit says Feb. 21, 2011
  32. FOX 6 Jefferson County votes to end merit pay raises Feb. 08, 2011
  33. AL.Com Jefferson County agrees to sell land for data center Feb. 03, 2011
  34. FOX 6 Jeffco Commission to vote on finalizing county home sale Feb. 15, 2011
  35. Jefferson County - Open Secrets
  36. AL.Com Jefferson County wants changes in county manager legislation Feb. 14, 2011
  37. Jefferson County - County Commission
  38. Jefferson County Employees Association Home Page
  39. The Birmingham News Sewer Corruption Cases Aug. 10, 2010
  40. AL.com "Birmingham Mayor Langford convicted on 60 charges of taking bribes" Oct. 28, 2009
  41. The Birmingham News "Larry Langford sentenced to 15 years in prison" March 5, 2010
  42. The Birmingham News "Updated: No prison time for former Jefferson County commissioner Mary Buckelew" Nov. 12, 2009
  43. 43.0 43.1 The Birmingham News"Jefferson County sewer scandal: Gary White sentenced to 10 years in prison for bribes" Aug. 10, 2010
  44. The Birmingham News "McNair sentenced to 5 years in prison" Sept. 20, 2007
  45. The Birmingham News "John Katopodis guilty on all 97 counts in Birmingham federal court" July 1, 2009
  46. MyFoxAL.com "John Katopodis sentenced to 3 years and 10 months in prison" March 12, 2010
  47. The Birmingham News "Former Jefferson County commissioner Jeff Germany to be released from prison Tuesday" Sept. 9, 2009
  48. The Birmingham News "Former Jefferson County Commissioner Jeff Germany helps group screen candidates" May 12, 2010