December 16, 2011 Leave a comment
Along with this state’s recent headline grabbing immigration policies rearing its ugly head the most populous county in Alabama is destined for the record books as well, in a story of greed and corruption.
Jefferson County, Alabama has filed for Bankruptcy and if the case is allowed to go ahead it will be the Largest Municipal bankruptcy filing in United States History.
When combined the water and sewage rates in this county of 658,466 residents the rates for these must have services has increased 329% over the last 15 years.
As with most of the gut wrenching economic hardships of our recent recession the poor are the unwarranted recipients of most if not all of the consequences. They are now being forced to bathe in bottled water and use portable toilets as they have been cut-off from these basic necessities through no fault of their own.
While disturbing it’s not surprising that local government officials and Wall Street financiers have been implicated again in another case of financial wrongdoing.
All of this stems from the debt the county took on to finance a new sewer system for Jefferson County residents. Initially the cost was to be $300 million dollars however that initial projection soared to $3.1 Billion dollars and the county is drowning in debt.
JP Morgan Securities along with two of its prior directors have already been fined as they were accused of offering bribes to local politicians to guarantee they would win business financing the project. Six former members of Jefferson County’s commissioners have also been found guilty of corruption as well as fifteen other government officials for accepting bribes.
The new local county commission has seen no other alternative other than to file for chapter nine bankruptcy protections in November as the only way to try to bring the county out of this current financial hole.
However the banks and bondholders who stand to lose $4.5 million dollars per month in repayment charges are fighting the commission’s decision and a bankruptcy judge will give the last word on whether the Jefferson County commission can proceed.
The local residents have absorbed rate hikes of 8.2% a year to attempt to deal with repaying the escalating debt. According to John S. Young the court appointed receiver the rates are projected to be 10% per year up to a whopping 25% for the cash poor citizens of the county in the future.
Along with the prospect of bankruptcy filing for the sewage project the country is also projected to have an extra $40 million dollar budget shortfall.
As five hundred county workers were recently laid off and are living off of unemployment insurance the county’s ability to finance local services is further called into question as tax revenues will most certainly fall.
Tony Petelos the new county manager believes it will be years before the county might be able to turn the tide. He stated, “The public has lost confidence in Jefferson County over the last decade and a half, because of the mismanagement, because of the corruption. We have got to rebuild that confidence” and that there is, “light at the end of the tunnel”.
However in regards to any relief the citizens might realize in their water and sewer rates he was quoted as saying, “When you look at the amount of debt, and you look at the revenue that is produced from the rate payers, there is no way it is going to come down,”.
Mr. Petelos who was the former mayor of Hoover city, Alabama recalls a Wall Street presentation about the same type of bonds that were used to finance the Jefferson County sewage project. After the presentation he recalls talking with his finance director in dismay and how they were both in agreement that they did not want to have anything to do with the type of financing that was presented.
One resident has found it is cheaper for him to pay a portable sanitation company $14 dollars a month to deal with his household sewage. His previous sewer and water bills sometimes reached $300 dollars per month this in a county whose citizens average income was $19,724 dollars per year according to the most recent census figures.
As most of the citizens of Jefferson County live off of meager Social Security income in this predominately poor community it is abundantly clear they cannot afford to pay these rate increases brought upon them by greed and corruption.
As the current Republican mindset in Washington is to gut most if not all of our governments regulation or oversight of the financial sector or corporations. This current situation in Alabama is the poster child for why we Do Need Regulation of banks and corporations that cannot be trusted to conduct themselves in a responsible honest fashion.
The meteoric rise of the debt from $300 million to $3.1 billion has been tied to construction issues and a series of bad bond and derivative deals that went sour during the 2008 financial debacle which has landed us in our current economic recession.
While for now as Jefferson county may be filing the largest Municipal bankruptcy in the history of our country. How many other cities and counties across the country are also reaching the breaking point remains to be seen.
Again Wall Street is being implicated in more financial crimes with few if any of the perpetrators being brought to justice. However as is usually the case the poorest citizens of the U.S. are being asked to suffer the brunt of the damage.
When will the poor citizens of the United States catch a break or at least be treated in a fair and equitable fashion and when if ever will the financial sector be held accountable?