Alabama county considers bankruptcy
With over 600,000 people, Jefferson County is the most populated region in the southern state. A $3.2 billion sewer system debt is crippling the economy, however, and now the county commission is considering filing for Chapter 9.
"We are real close to filing bankruptcy, probably at 80 percent,” commission Sandra Little Brown says, reports Reuters. Officials have been in talks with creditors but say that they are a standstill, with discussions pegged to end in mere days. On Thursday the commissioners will hold a special meeting to try and figure out if they can still try to work out a deal with creditors or file for bankruptcy.
Should Jefferson County have to file for Chapter 9, it will make it the largest municipal bankruptcy in the history of America. Orange County, California was forced into filing back in 1994, but the debt in Alabama is nearly double what the SoCal county faced.
So far the county has already borrowed $10 million from its reserve fund just to stay afloat. Last week, commissioner Joe Knight said that he still hadn’t heard from the creditors that they were hoping would bail them out.
The county has already cut more than 500 jobs so far to try and save the economy, but an Alabama Fox affiliate quotes UAB economic finance professor Dr. Andreas Rauterkus as saying that citizens in might want to expect more cuts in the near future.
"If it is for senior citizens, if it is maintenance, if it's the sheriff's office, whatever it might be. Any kind of services the county offers will be cut altogether or cut down significantly,” says Rauterkus.
Commissioners are hoping to have around $1.3 billion of its sewage problem taken care of from creditors, but have so far heard nothing. Talks are expected to end on July 29.