The Jefferson County Commission is breaking the law.
It has done so knowingly and willfully for the last six months. To be fair, the commissioners aren’t stuffing their pockets with ill-gotten gains, the way some predecessors did. Rather, it’s the lack of money that’s the problem. Alabama law requires the county to pass a balanced budget, and the commission didn’t do that.
Jefferson County has been operating under an unbalanced budget since its fiscal year began in October. Even if the county hits all its revenue marks and controls expenses, it will spend about $40 million more than it collects in taxes. A combination of factors caused the deficit. The weak economy has played a role, but the major reason has been the loss of the county’s occupational tax to successive court challenges.
To be fair to the commission, it’s not as though the county hasn’t cut costs. Through layoffs and attrition, the county has reduced its payroll by nearly one-third since 2008, or about 900 positions. About 700 of those cuts have come in the last two years. Capital expenditures for things like new trucks and roof repairs have been frozen, and the county’s bankruptcy filing has allowed it to suspend contracts, such as leases and economic development projects, that were draining its general fund.
But the cuts were not enough to balance the budget. To make that happen will require cuts so deep that the commission does not seem willing to make them. Their reasoning is understandable. The commission would have to eliminate whole departments, such as inspections services and senior citizen assistance. Property maintenance might become impossible. Complying with federal consent decrees, such as the 30-year-old personnel board agreement, would be laughable. The county will have difficulty continuing to function.
Instead of making the necessary cuts, the commission is waiting in the hope that the Alabama Legislature will give the county new revenue, preferably in the form of a new occupational tax.
It’s a hope in hell.
When the county first passed its unbalanced budget last year, the commission then hoped that it would reach a settlement with its Wall Street creditors (which didn’t happen). With a settlement in hand, the governor was supposed to convene a special session of the Alabama Legislature (which didn’t happen, either). In that special session, which would have happened late last year, the Legislature would have had to fix the county’s general fund problems to prevent a bankruptcy, likely by passing a new occupational tax (still hasn’t happened). In short, the county began spending its one-time revenues, mostly from court settlements, on operating costs. The commission hoped that it was a stop-gap — a sort of bridge loan to itself until new revenue from authorized by Montgomery would stabilize its finances. At most, the bridge should cost $10 million — or about three months of its operating deficit.
But it was bridge loan to nowhere. The county never reached an agreement with its creditors. It entered Chapter 9 bankruptcy. There was no special session. There was no new revenue from Montgomery.
While the bankruptcy held off sewer creditors. It did little to fix the county’s deficit. So at the beginning of the calendar year (now three months into the county’s fiscal year), the county decided to hang its hopes on Montgomery again. The commission asked the Jefferson County legislative delegation for a replacement occupational tax, with the warning that, if it received no new revenue, the disaster ax would fall on county employees.
Now the Legislature is almost halfway done with its regular session, and the county appears no closer to closing the deal than it did when it passed its unbalanced budget last fall.
The county’s legislative delegation has no urgency to fix the problem. Both parties’ delegation leaders are doing as much to perpetuate it as to solve it.
Rep. Paul DeMarco has proposed a bill to allow municipalities to handle car tags. The lines at the county courthouse are the most visible and most aggravating consequence to the public so far, but trying to shorten car tag lines it treating the symptom and not the cause. What’s more disturbing is that DeMarco does not believe that the county’s problems go beyond that.
The other co-chair of the delegation, Rep. John Rogers, could help, if he weren’t so busy laughing his ass off about the whole thing. Rogers has held a grudge against the county for years, and he’s enjoying watching it crumble. It was Rogers, after all, who meddled with the last occupational tax until it could not survive a court challenge.
Even the more well-meaning lawmakers are so busy trying to prove that they are the smartest people in the room, that they accomplish about as much as the furniture in the room.
There are only four scenarios through which this can play out.
Scenario One: The county waits and the legislature delivers the revenue it needs. No more county employees lose their jobs and the county is able to stabilize its general fund problem. This is the best-case scenario, and the least likely.
Scenario Two: The county waits and the legislature does nothing. At the end of the legislature’s regular session, the county has to fire hundreds of employees to balance its budget. In the meantime, it will burn through another $10 million of its reserves. This is the worst-case scenario, and the most likely.
Scenario Three: The county cuts costs now by sending employees home. They shift blame to the legislative delegation, which then gives the county the revenue it needs to bring the employees back and provide basic services for the public. The county struggles for several months while it hires back the employees it let go, but it still has reserves to fall back on.
Scenario Four: The county cuts costs now by sending employees home. They shift blame to the legislative delegation, which tells the county to go to hell.
It didn’t take much political aptitude to predict Jefferson County would go into bankruptcy last year, even when everyone involved fought against that outcome. Nor does it take much smarts to extrapolate where this is going.
The county commission has only one decision to make: Does it cut costs now or wait? Of the four scenarios above, the commission gets what it wants without draconian cuts in only Scenario One, the least likely. Nothing in history would lead a political observer to think this one is apt to happen.
As I said, I believe Scenario Two is the most likely, because I don’t think the county commission has the nerve to make further cuts. It certainly hasn’t so far. Nor has the legislature shown it can fix a problem like the county’s until it’s too late. The commission and the delegation are playing chicken, but neither side will flinch.
It’s up to the commission to make sure this doesn’t happen, and there’s only one way to do that. Of the other three scenarios, the commission must to layoff more employees to cut costs. In Scenario Two — the worst-case scenario — the commission is forced into layoffs.
So if Scenario One is the least likely to happen, and Scenario Two is the one you want to avoid, that leaves Three and Four. To get either one, there’s only one thing the commission can do: Make the painful cuts.
When DeMarco first proposed his car tag idea, I compared it to giving a tuberculosis victim a cough drop. It treats the symptom and not the cause. But the county is not doing much better. By waiting, the county is simply delaying the pain.
And if anyone accuses the the commission of holding county services hostage or punishing the public for not supporting the occupational tax, the commissioners have one solid argument in their defense: They’re only following the law.