Alabama’s Biggest County Teeters Closer To Financial Crisis


The Alabama Supreme Court ruling has struck down Jefferson County’s occupational tax, cutting off a key source of revenue and pushing the county further towards financial crisis, the Wall Street Journal reports.

Jefferson County – home to Birmingham – has been the black sheep of muni finance for years. Fiscal mismanagement, corruption and bad financing decisions in the mid-2000s left the county with $3.2 billion in sewer debt.

The county is now reeling towards what could be the largest municipal bankruptcy in U.S. history.

County officials had recently projected an optimistic outlook for Jefferson’s financial future. Reuters reported last week that the county was starting to implement a fiscal turnaround plan that includes audits, management improvements and spending cuts.

The state Supreme Court ruling now threatens to derail that recovery strategy. Should a creditor decide to come after the county’s assets, the county will likely be forced to file for Chapter 9 municipal bankruptcy.

However the county’s fiscal nightmare ends, Jefferson could be a blueprint for the hundreds of debt-burdened U.S. municipalities facing insolvency.

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